Analysts predict Tencent's highest since 2001: What will be the growth driver?

One of China's largest technology giants, Tencent, reported a better-than-forecast second quarter, which triggered a massive increase in analysts' target prices and brought expectations for the growth of quotations back to historical highs. Against the backdrop of double-digit revenue growth and strengthening positions in key segments, experts see the company's shares as undervalued potential, especially given the growing role of artificial intelligence.

Since Aug. 13, when the report was published, the consensus forecast for Tencent's target share price has risen more than 5% to HK$688. A more notable increase in the consensus forecast for the company's shares was only in March, when the market was encouraged by optimism around AI startup DeepSeek, Bloomberg notes.

At a price of 594.5 Hong Kong dollars (at the time of writing Bloomberg), the new target implies a rise in Tencent shares by almost 16%. At least 16 analysts believe the securities could surpass the all-time high of HK$715 reached on February 18, 2021.

Tencent increased revenue by 15% to 184.5 billion yuan ($25.7 billion) in the second quarter, exceeding analysts' forecasts. Nearly all key segments showed double-digit growth, including advertising, which uses AI technology to improve efficiency. Among the drivers cited in the report is the release of mobile game Valorant Mobile, scheduled for August 19.

Tencent's fair value estimate, in particular, was raised by Morningstar research analyst Ivan Su, up 13% to HK$800. This is due to both an improved outlook and an increase in the market value of the company's publicly traded assets. The new valuation assumes a P/E ratio (price-to-earnings-per-share ratio) of 30x in 2025.

"The stock is now trading at around P/E 22x, and we believe it is undervalued. The market has already partially put the growth of investments in artificial intelligence into the price, but, in our opinion, has not yet fully taken into account their long-term potential," the expert said.

Benchmark Investment Bank also raised its target price on Tencent shares from HK$660 to HK$700, reiterating a "buy" recommendation. The bank called the second-quarter results "outstanding," Investing.com writes.

Benchmark noted that AI is emerging as a key growth driver for Tencent. Looking ahead to the second half of 2025, Benchmark sees additional upside potential for the stock, building on strong momentum across all segments and a continued shift to a higher-quality revenue mix.

Investment company Tiger Securities increased its target price for Tencent's shares from HK$620 to HK$645, maintaining a "buy" recommendation. Tiger Securities believes that Tencent is well positioned for sustainable long-term growth through the development of AI-direction, high-margin games with high ARPU (average revenue per user), as well as further improvement of monetization in fintech and cloud services, Investing.com points out.

In 2022, Tencent was hit hard by anti-monopoly regulation in China, which caused its shares to fall to a five-year low. Since the beginning of 2025, the company's quotations have risen by 39%: on the one hand, Tencent has not benefited from the AI boom as much as its competitor Alibaba, but on the other hand, it has not suffered from stiff competition like Meituan, a company specializing in online services for ordering and delivery, Bloomberg notes.

At trading on August 15, the shares cost 592 Hong Kong dollars, showing a slight growth of 0.3%. Most Wall Street analysts do not doubt the attractiveness of Tencent shares at the current price: according to FactSet, 55 economists recommend buying the securities of the Chinese holding (Buy and Overweight ratings), three advise to hold them (Hold) and only one - to sell (Sell).

This article was AI-translated and verified by a human editor