A Morningstar research report points out that Tencent's AI development will not be a long-term, continuous drain on cash. After purchasing significant computing power for training, Tencent's Hunyuan large language model is expected to see rapid improvement. If Hunyuan's performance falls short of expectations, Tencent can lease the relevant hardware computing power to third parties, thus quickly recouping this substantial investment. However, in the long run, the greatest potential of Tencent's AI business lies not in leasing computing power, but in the commercialization of AI in various application scenarios such as advertising, gaming, and WeChat AI agents. Tencent's free cash flow is expected to turn positive in 2027, after which the company will have greater room to expand its share buyback program.
