Morningstar says Tencent’s AI build-out will not be a sustained cash drain.
After large compute purchases for training, the Hunyuan large language model
(LLM) is expected to improve quickly; if Hunyuan underperforms, Tencent can
lease the hardware to third parties to recoup investment. Morningstar sees the
greatest long-term upside from commercializing AI across advertising, gaming and
WeChat AI agents. Morningstar projects Tencent’s free cash flow turns positive
in 2027, creating scope for larger share buybacks thereafter.
