...March 24, 2025 This report does not constitute a rating action. HONG KONG (S&P Global Ratings) March 24, 2025--Tencent Holdings Ltd. has the capacity to absorb a spike in AI-related spending. We believe the company's growing cash flows and moderating share repurchases will help it meet its 2025 capital expenditure (capex), which is double our previous estimate. S&P Global Ratings expects only a marginal increase in Tencent's leverage over the next 12-24 months and believes the company will maintain minimal net debt. Tencent's fourth-quarter results indicated the company's growing core business and AI investments could lead to longer- term improvements in its business competitiveness, supporting the rating (A+/Stable/--). Tencent's AI-related spending will continue to rise, in our view. The company is substantially increasing its procurement of AI chips to fulfill strong demand--both internally (for its advertising and gaming businesses) and externally (cloud services). We forecast annual...
