Tencent (SEHK:700) Valuation Review After Record Gaming Results and Strengthening Overseas Momentum

Tencent Holdings (SEHK:700) just booked record results from its gaming arm, with overseas titles pulling more weight as rivals stumbled. That outperformance is quietly reshaping how investors are thinking about the stock.

See our latest analysis for Tencent Holdings.

Despite a softer 30 day share price return, Tencent’s HK$616 share price still reflects strong momentum, with a roughly 48 percent year to date share price gain and a standout three year total shareholder return of about 110 percent as investors price in its gaming strength and AI exposure.

If Tencent’s run has you thinking about what else could benefit from AI and digital growth, it is worth exploring high growth tech and AI stocks for more ideas beyond the big names.

Yet with Tencent trading near HK$616 but still sitting at a roughly 21 percent discount to analyst targets, should investors view the stock as undervalued, or is the market already pricing in years of AI and gaming growth?

Most Popular Narrative Narrative: 24.3% Undervalued

Kapirey’s narrative pegs Tencent’s fair value well above the HK$616 last close, framing a multi year growth story driven by product integration and AI.

WeixinVideo Accounts, Mini Games and Weixin Search enhance user value by creating seamless connections with products, services and content while presenting exciting revenue opportunities. Generating high margin revenue streams from own traffic, with platform costs already paid for.

Read the complete narrative.

Want to see how this ecosystem flywheel turns into a much higher valuation? The secret mix combines ambitious revenue growth, fatter margins and a bold profit multiple.

Result: Fair Value of $813.65 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, tighter Chinese AI regulations or prolonged US scrutiny of Chinese tech could squeeze margins and restrain Tencent’s overseas expansion, which would challenge this bullish outlook.

Find out about the key risks to this Tencent Holdings narrative.

Build Your Own Tencent Holdings Narrative

If this perspective does not quite align with your own view or you would rather dig into the numbers yourself, you can build a custom narrative in just a few minutes, Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Tencent Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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