Tencent Holdings (HKG:0700) will retain its creditworthiness even with faster AI-linked capital investments due to solid performance from its core businesses, S&P Global Ratings said in a Tuesday release.
Cash generation from stable online games and marketing service growth should anchor the spending, which could rise to above 200 billion yuan in 2026 from 87.5 billion yuan last year, S&P said.
The rating agency's expectation of a solid financial buffer for the technology conglomerate holds even with a possible significant reduction in free operating cash due to the accelerated AI allocation.
S&P believes the company will shift to a slight net debt position, or a debt-to-EBITDA ratio of between 0.2x and 0.3x, for the next two years amid dividends, share buybacks, and additional investments.
The company's push for workplace agentic AI offers high monetization and user retention prospects, aided by solid workplace engagement through the Weixin/WeChat ecosystem, S&P said.
However, the AI payback cycle and the outlook on future capital spending returns are less certain due to notable cost inflation for advanced technology devices, according to S&P.
Shares of the company fell over 1% in recent trade.