Tencent's latest Hy3 model launch is a step in the right direction, Bernstein analysts say in a research note. While Hy3 is not frontier, it has the capabilities Tencent needs to build agentic services across its ecosystem, they say. The improvements in the latest model are a confirmation for Tencent's new AI team after the recent overhaul, they note. The analysts think the next iteration of Tencent's model by late 2026 or early 2027 represents a sensible base case for the next step forward. Bernstein expects Tencent's agentic AI rollout to happen gradually and monetization to come via merchants subscribing to the new agentic AI services to get more traffic. Shares are last 2.7% higher at 464.20 Hong Kong dollars. (sherry.qin@wsj.com)