Morgan Stanley cuts Tencent target to HKD 650 for Tencent Holdings stock
Published on 10/12/2026 at 09:58 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWSKey points in brief
- Morgan Stanley cut its Tencent target from HKD 735 to HKD 650 on October 12, 2026, citing AI investment pressure on margins.
- Tencent reported second-quarter 2026 revenue of RMB 204.8 billion, up 11 percent year over year.
- Tencent stock was EUR 48.39 at Lang & Schwarz on October 12, 2026, while market capitalization stood at HKD 3.8 trillion.
Tencent Holdings Ltd. (KYG875721634) was trading at EUR 48.39 at Lang & Schwarz on October 12, 2026 at 9:52 a.m. CEST. On the same date, Morgan Stanley cut its Tencent target from HKD 735 to HKD 650, citing higher artificial intelligence investment and near-term margin pressure, according to GMT EIGHT.
Target falls as AI spending rises
Morgan Stanley retained its overweight rating while reducing the target by HKD 85. Its report also lowered estimates for Tencent's non-IFRS operating profit in 2026 and 2027 by 6 percent to 7 percent as investment in basic models, GPUs and other AI products expands.
The scale of that investment is visible in Tencent's second-quarter figures. According to Yahoo Finance, revenue reached RMB 204.8 billion in the second quarter of 2026, up 11 percent year over year, while non-IFRS operating profit rose 9 percent to RMB 75.6 billion. Operating capital expenditure rose 190 percent year over year to RMB 51.8 billion.
What does AI spending mean for margins?
The immediate trade-off is clear: Tencent is funding a new AI business while its established franchises continue to generate growth. In the second quarter of 2026, non-IFRS operating margin excluding new AI products was 42 percent, up 2.8 percentage points year over year, while the overall non-IFRS operating margin fell 0.6 percentage point to 36.9 percent, according to Yahoo Finance.
Three dated milestones
On August 12, 2026, Tencent reported second-quarter revenue of RMB 204.8 billion and non-IFRS net profit attributable to equity holders of RMB 68.4 billion, according to Yahoo Finance. On October 8, 2026, Morgan Stanley's target was HKD 735 before the October 12 cut to HKD 650. Also on October 12, 2026, Tencent announced a proposed international notes offering under its global medium-term note program, with ten joint global coordinators, according to DimSumDaily.
Stock valuation and trading context
Tencent's Hong Kong listing traded at HKD 425.80 on October 12, 2026 at 7:42 a.m. UTC, equivalent to 3:42 p.m. HKT, according to the structured market quote. The 52-week range was HKD 411.00 to HKD 664.00, and market capitalization was HKD 3.8 trillion. The HKEX listing gives investors a direct view of how the market weighs Tencent's cash-generating core against the cost and potential of its AI expansion.
Trading view for Tencent stock
The central question is whether AI spending converts into new revenue quickly enough to offset the margin effect flagged by Morgan Stanley. Tencent's second-quarter revenue growth of 11 percent and its 42 percent non-IFRS margin excluding new AI products provide the two operating markers for that debate. The stock was trading at EUR 48.39 at Lang & Schwarz on October 12, 2026 at 9:52 a.m. CEST.
The further course of trading is shown by the continuously updated real-time quote of Tencent Holdings stock.
Tencent Holdings at a glance
- Company: Tencent Holdings Limited
- ISIN: KYG875721634
- Ticker: 0700.HK
- Primary exchange: HKEX
- Price Lang & Schwarz as of October 12, 2026, 9:52 a.m. CEST: EUR 48.39
- Market capitalization: HKD 3.8 trillion as of October 12, 2026
- 52-week range: HKD 411.00-664.00 as of October 12, 2026
- Sector / Industry: Communication Services / Internet Content and Information
- Index membership: Hang Seng Index
Market context: Latest market reports.
