Goldman Sachs and Morgan Stanley Strongly Support Tencent Stock: Hear What They Say

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Top investment banks such as Goldman Sachs and Jefferies have formed a strong consensus on Tencent stock, all maintaining positive ratings. The market generally predicts significant upside potential for its target prices from 2025 to 2026.

Looking ahead, Goldman Sachs has set a target price of approximately 89.73 USD, while Jefferies predicts as high as 101.63 USD. The market average target price has also reached about 93.18 USD.

The core logic supporting these ratings is very clear. Strong recovery in gaming and advertising businesses, new increments from Video Accounts commercialization, and the company’s ongoing shareholder return plans jointly enhance the attractiveness of this stock.

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Key Takeaways

• Goldman Sachs and Morgan Stanley are bullish on Tencent stock, believing its core businesses are improving.
• Tencent’s gaming and advertising businesses are recovering growth, with Video Accounts bringing new revenue.
• Tencent returns value to shareholders through stock buybacks and dividends, increasing investor confidence.
• Investing in Tencent stock also has risks, such as poor economic environment and intense market competition.
• Major investment banks have given high target prices, believing Tencent stock has upside potential in the future.

Goldman Sachs: Gaming and Advertising Recovery, Target Price 701 HKD

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Goldman Sachs is one of the main investment banks bullish on Tencent’s future. The bank’s analysts believe Tencent’s core businesses are experiencing a strong recovery cycle with new growth potential, thus holding an optimistic view on its future performance.

Rating and Target Price: Reiterate “Buy”

Goldman Sachs, in its latest research report, reiterated a “Buy” rating on Tencent stock. The bank’s analysts set a clear target price for the stock.

Goldman Sachs’ target price is 701 HKD. This price is based on its comprehensive valuation model and reflects confidence in the company’s future growth across various businesses.

This target price implies that Goldman Sachs believes the Tencent stock has significant upside potential.

Core Bullish Reasons: Strong Dual Engine Power

Goldman Sachs’ bullish logic is mainly built on Tencent’s two core businesses—gaming and advertising—showing strong performance, while the company’s profitability has also significantly improved.

1. Gaming Business: Classic Games Warming Up, New Games Potential to Be Released
   • Flagship Game Revenue Recovery: “Honor of Kings” and “Peacekeeper Elite” as Tencent’s cornerstone products have seen revenue recovery. Data shows “Honor of Kings” generated revenue of up to 134.3 million USD in October 2025, with over 260 million monthly active users. Among them, revenue contribution from mainland China’s iOS market exceeded 98%, showing strong user stickiness and paying ability.
   • Strategic Layout for New Game “Dream Star”: Although the newly launched party game “Dream Star” temporarily lags behind competitors in market performance, Tencent has invested heavily in it. The company not only advertised the game on ByteDance platforms for the first time but even transferred personnel from other key projects to support its development. This indicates Tencent’s determination to make it the next growth point.
2. Advertising Business: Video Accounts and Mini Programs Become New Growth Engines Advertising business growth far exceeded market expectations, especially contributions from the WeChat ecosystem. Goldman Sachs points out that Video Accounts and Mini Programs are becoming key forces driving advertising revenue.
   • WeChat Video Accounts advertising revenue grew over 50% year-on-year.
   • Advertising revenue related to mini-games and short dramas within Mini Programs also achieved 50% strong growth. These data prove Tencent is successfully converting massive user traffic into commercial value.
3. Profit Margin Improvement: Significant Results from Cost Reduction and Efficiency Enhancement Tencent’s cost reduction and efficiency measures over the past year have achieved significant results, greatly improving the company’s profitability. Management has shown high discipline in capital allocation, successfully balancing short-term profitability and long-term strategic investment.

   Financial Indicator (Q1 2025)	Data	Year-on-Year Growth
   Total Revenue	180 billion RMB	13%
   Gross Profit	100.5 billion RMB	20%
   Operating Profit	69.3 billion RMB	18%

   More importantly, the operating profit margin expanded to 39%, clearly indicating strengthened cost management and stronger revenue stream scalability.

Potential Risks: Macroeconomic Uncertainty

Despite the optimistic outlook, Goldman Sachs also points out potential risks facing Tencent, with the macroeconomic environment being the biggest uncertainty factor.

• Consumer Spending Fluctuations: Slowdown in China’s macroeconomy may lead to reduced consumer spending in entertainment like gaming, while enterprises may cut advertising budgets, directly affecting Tencent’s two core businesses’ revenue. Conversely, if the consumption environment improves, it will directly promote growth in gaming and advertising businesses.
• Regulatory Policy Changes: The market expects mainland China’s AI regulatory guidelines to be issued in Q1 2026. The final form of related policies will affect the launch and profit model of Tencent’s AI products.

Investors need to closely monitor the strength of China’s macroeconomic recovery and long-term stability of related policies; these variables will be key to affecting Tencent’s future performance.

Morgan Stanley: Bullish on Video Accounts and Shareholder Returns

Morgan Stanley is also a firm supporter of Tencent. The bank is not only bullish on Tencent’s own business development but its optimistic stance also aligns with positive predictions for the entire Chinese market, believing the MSCI China Index has upside potential, with Tencent as a weight stock being a core beneficiary.

Rating and Target Price: Maintain “Overweight”

Morgan Stanley clearly expresses confidence in Tencent’s future stock price, maintaining an “Overweight” rating. This rating indicates the bank believes Tencent stock will outperform the market average.

This target price reflects Morgan Stanley’s recognition of Tencent’s new growth points and shareholder value enhancement.

Core Bullish Reasons: New Growth Engine and Shareholder Value

Morgan Stanley’s bullish logic focuses on two core pillars: one is the brand-new growth power from Video Accounts, the other is the company’s firm commitment to shareholder returns.

1. Video Accounts Commercialization: Huge Potential for New Growth Engine Morgan Stanley believes WeChat Video Accounts is rapidly growing into Tencent’s next key growth engine after gaming and advertising. Its commercialization potential is far from fully explored.
   • Advertising Load Rate Improvement Space: Analysts point out that Video Accounts’ current advertising load rate still has room for improvement. As the platform ecosystem matures, higher advertising density in the future will directly translate into considerable revenue growth.
   • Closed-Loop Ecosystem: Video Accounts’ unique advantage lies in its deep integration into the WeChat ecosystem. It is building a “closed-loop transaction” system from content consumption to commodity purchase through live e-commerce, Mini Programs, and WeChat Pay. This not only improves user experience but also brings new commercialization opportunities for Tencent.
2. Shareholder Value: Generous Buybacks and Dividends Tencent’s commitment to shareholder returns is another major highlight attracting investors. The company effectively enhances shareholder value through large-scale stock buybacks and continuously growing dividends.

   In 2024, Tencent announced a stock buyback plan of up to approximately 112.5 billion HKD (14.4 billion USD), leading the market by a wide margin.
   To more intuitively show its buyback strength, refer to the table below:

In addition, Tencent conducted buybacks for 32 consecutive trading days in early 2025; this continuity and determination strengthened market confidence. From a global perspective, Tencent stock valuation also has attractiveness. For US market participants seeking global tech stock investment opportunities, Tencent’s valuation has advantages compared to peers.

This generous shareholder return strategy combined with relatively reasonable valuation jointly forms an important cornerstone for Morgan Stanley’s bullish view on Tencent.

Potential Risks: Intensifying Industry Competition

Despite the bright outlook, Morgan Stanley also reminds investors to pay attention to risks from intensifying industry competition, especially in short video and e-commerce fields.

• User Time Competition: Short video platforms are the main battlefield for competing for user attention. Douyin and Kuaishou have already occupied most market share; Video Accounts as a latecomer needs to continuously launch high-quality content and innovative features to attract and retain users.
  • Douyin: Expected to occupy 50% of Chinese users’ online time share by end of 2025.
  • Kuaishou: Expected to occupy 30% of Chinese users’ online time share by end of 2025.
• E-Commerce Market Impact: Short video platforms represented by Douyin are reshaping the e-commerce landscape. They quickly erode traditional e-commerce platforms’ market share with content and traffic advantages. Goldman Sachs predicts that by 2025, short video e-commerce GMV will account for 25% of total online retail. This means Tencent’s Video Accounts e-commerce business not only needs to catch up but also find its differentiated advantages in intense market competition.

Therefore, when evaluating Tencent, investors must view intense industry competition as a key variable.

Investment Banks Bullish on Tencent Stock: Consensus and Differences

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Although major investment banks generally hold optimistic attitudes toward Tencent’s future, their specific predictions and focus points have subtle differences. In-depth analysis of these consensuses and differences can provide investors with a more comprehensive perspective.

Rating and Target Price Summary: Jefferies Leads

Wall Street ratings on Tencent are highly consistent, generally giving “Buy” or “Overweight” recommendations. However, in target price settings, institutions’ optimism levels vary, with Jefferies giving the most positive prediction.

This table clearly shows that although baseline bullish, different analysts’ quantitative assessments of Tencent’s growth potential vary.

Market Consensus: Gaming Recovery and Advertising Growth

The core foundation of major investment banks’ bullish logic highly overlaps. The market generally believes that drivers supporting Tencent’s future growth mainly come from the following aspects:

• Core Business Recovery: Gaming business relies on classic product revenue warming up, advertising business benefits from strong growth in Video Accounts and Mini Programs, with both traditional engines full of power.
• New Increment Certainty: Video Accounts commercialization process is seen as the most certain new increment source, with its potential in advertising and live e-commerce far from fully released.
• Shareholder Returns: The company’s active and large-scale stock buyback plan significantly enhances investor confidence.

View Differences: Fintech Business Outlook

The main divergence point in analysts’ views centers on the future trend of fintech business. This business faces a complex regulatory environment, with its prospects becoming a key variable affecting Tencent stock valuation.

Regulators are strengthening scrutiny of the fintech industry. The market worries that dominant payment tools like WeChat Pay may face stricter regulation, while promotion of mainland China’s digital RMB may also bring new competition patterns.

Facing these uncertainties, Tencent management has shown a positive cooperation stance. Company President Martin Lau once stated that Tencent positions itself as an industry “cooperator and technology enabler,” not a “disruptor,” and promises to actively comply with regulatory requirements. Therefore, how Tencent successfully navigates this regulatory cycle becomes a core issue investors must consider when assessing its long-term value.

The market is generally bullish on Tencent stock’s future. Analysts predict an average target price of 59.17 USD, believing current value is undervalued by about 26%. This consensus is built on gaming and advertising business recovery, Video Accounts new increments, and active shareholder return strategies.

Investors should focus on several key variables. First is the strength of macroeconomic recovery, with the International Monetary Fund predicting China’s 2025 economic growth at about 5%. Second is new games’ market performance, such as their bestseller rankings. Finally is regulatory policy stability; although new rules are stricter, regulators also show willingness to balance the industry.

FAQ

Why are Goldman Sachs and Morgan Stanley bullish on Tencent?

Investment banks are bullish because Tencent’s core businesses are strongly recovering. Gaming and advertising, the two traditional engines, are resuming growth, while Video Accounts commercialization provides clear new increments. In addition, the company’s large-scale shareholder return plan significantly enhances market confidence, jointly forming the core bullish logic.

What are the specific target prices given by investment banks?

Major investment banks generally give positive ratings, with target prices showing significant upside potential. For US market participants seeking global tech stock investment opportunities, these predictions provide important references.

What are the main risks in investing in Tencent stock?

Main risks come from three aspects. First is macroeconomic uncertainty, which may affect consumer spending and enterprise advertising budgets. Second is intensifying industry competition, especially in short video and e-commerce fields. Finally, changes in the regulatory environment for fintech business in mainland China also deserve attention.