China’s artificial intelligence (AI) race may be entering a new phase, and Tencent Holdings Limited (TCEHY) appears determined to secure a front-row seat. After Meta Platforms (META) $2 billion acquisition of Manus was derailed by Chinese regulators, Tencent is reportedly emerging as the leading candidate to back one of the world’s fastest-growing AI startups. If completed, the deal would deepen Tencent’s AI ambitions while strengthening its position in the rapidly evolving AI agent market.
According to reports, Tencent is in talks with Manus’ original investors, including HSG and ZhenFund, to repurchase the Singapore-based AI startup at a valuation of no less than $2 billion. Tencent is expected to become Manus’ largest shareholder. The proposed transaction follows Beijing’s order requiring Meta to unwind its acquisition over concerns that AI technology developed in China could fall under export-control and national security rules.
Manus has emerged as one of the leading developers of autonomous AI agents, such as software capable of completing complex tasks with limited human intervention. On the other hand, Tencent has been aggressively expanding its AI ecosystem, integrating large language models across WeChat, Tencent Cloud, enterprise software, gaming, and productivity tools.
Adding a major stake in Manus could accelerate Tencent’s AI agent roadmap and complement its plans to embed intelligent assistants into its products.
About Tencent Holdings Stock
Tencent Holdings is one of the world’s largest technology companies, operating across social media, gaming, digital payments, cloud computing, advertising, and AI. Headquartered in Shenzhen, China, the company owns flagship platforms such as WeChat and QQ, while also holding investments in leading gaming studios and technology companies worldwide. Tencent has increasingly focused on expanding its AI capabilities by integrating large language models and AI-powered services across its ecosystem. Tencent has a market cap of $540.21 billion, making it one of the most valuable technology companies globally.
Tencent Holdings has had a volatile 2026, giving back a significant portion of the gains recorded in 2025. The stock is down 24.26% year-to-date (YTD), pressured by a broad sell-off in Chinese technology shares, concerns over the pace of China’s economic recovery, and weaker investor sentiment toward AI-related names.
Over the past 52 weeks, TCEHY has declined 8.14%, and it currently trades 33.8% below its 52-week high of $87.68 reached in October 2025. Despite the recent correction, Tencent continues to outperform many Chinese internet peers over the longer term, supported by its dominant gaming, advertising, fintech, and cloud businesses, while investors remain focused on whether AI monetization and earnings growth can reignite the stock’s momentum.
The stock is currently trading at 5.20 times sales, which is a significant premium to the industry peers.
Q1 Results Demonstrate Continued Growth
Tencent Holdings released its first-quarter 2026 results on May 13. For the quarter, revenue increased 9% year-over-year (YOY) to RMB 196.5 billion ($29 billion), while gross profit rose 11% to RMB 111.3 billion ($16.4 billion). On an IFRS basis, operating profit climbed 17% to RMB 67.4 billion ($9.9 billion), with the operating margin expanding to 34.3% from 32% a year earlier. Profit attributable to equity holders increased 21% YOY to RMB 58.1 billion ($8.6 billion), while EPS increased to RMB 6.302 from RMB 5.129 in the prior-year quarter.
On a non-IFRS basis, operating profit increased 9% YOY to RMB 75.6 billion ($11.1 billion), with the operating margin remaining stable at 38.5%. Operating profit excluding new AI products grew 17% to RMB 84.4 billion ($12.5 billion), highlighting the profitability of Tencent’s core businesses before incremental AI investments. Non-IFRS net profit increased 11% YOY to RMB 69.8 billion ($10.3 billion), while non-IFRS EPS was RMB 7.364.
Business performance remained broad-based. Domestic Games revenue grew 6% YOY, International Games revenue increased 13%, Marketing Services revenue surged 20%, benefiting from AI-enhanced advertising tools, while FinTech and Business Services revenue advanced 9% YOY. In addition, Tencent continued investing aggressively in AI, with capital expenditures rising 16% YOY to RMB 31.9 billion ($4.7 billion), while maintaining strong cash generation and shareholder returns through ongoing share repurchases.
Analysts tracking TCEHY project the company’s EPS to climb 19.8% YOY to $4.11 in fiscal 2026 and grow another 11% to $4.56 in fiscal 2027.
What Do Analysts Expect for Tencent Stock?
Wall Street’s bullishness is evident in TCEHY having a consensus “Strong Buy” rating. Of the 20 analysts covering the stock, 15 advise a “Strong Buy,” one suggests a “Moderate Buy,” and four analysts give it a “Hold” rating.
The Street-high target price of $106 suggests that the stock could rally as much as 82.7% from here.
On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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