NetEase (NTES) AI Stock Analysis

• Market Cap: $70.42B
• Dividend Yield: 2.19%
• Average Volume (3M): 782.44K
• Price to Earnings (P/E): 16.0
• Beta (1Y): 0.52
• Revenue Growth: 5.69%
• EPS Growth: 32.87%
• Country: US
• Employees: 26,028
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 1.59
• Shares Outstanding: 633,591,800
• 10 Day Avg. Volume: 874,261
• 30 Day Avg. Volume: 782,439
• PEG Ratio: 1.68
• Price to Book (P/B): 3.82
• Price to Sales (P/S): 5.60
• P/FCF Ratio: 12.69
• Enterprise Value/Market Cap: 6.40
• Enterprise Value/Revenue: 4.02
• Enterprise Value/Gross Profit: 6.25
• Enterprise Value/Ebitda: 11.87
• 1Y Price Target: $163.08
• Price Target Upside: 39.17% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: $132.00 ▲(12.65% Upside)
• Action: Reiterated Date: 02/14/26
• Date: Action: Reiterated 02/14/26

NTES scores well on financial strength and cash generation, supported by a conservative balance sheet and positive earnings-call outlook/capital returns. The overall score is held back primarily by weak technical momentum (downtrend and negative MACD) and the risk of slowing top-line growth.

Positive Factors

Very strong balance sheet

A materially de‑risked balance sheet with sharply lower debt and rising equity gives NetEase lasting financial flexibility. Low leverage supports capital returns, M&A optionality, and resilience through gaming cycles, reducing refinancing and solvency risk over the next several quarters.

Robust free cash generation

Consistent and growing operating and free cash flow that closely tracks earnings indicates high earnings quality and cash conversion. Strong FCF funds R&D, dividends and buybacks, sustaining investment in products while returning capital to shareholders over the medium term.

Franchise strength and AI-driven product edge

Milestone performance from long‑running franchises plus production‑level AI tools (design, art, QA, AI NPCs) create durable competitive advantages: higher player engagement, faster content cycles and differentiated global launches that support recurring revenue and product longevity.

Negative Factors

Slowing top-line growth

A deceleration from strong prior growth to flat/declining revenue signals maturing core markets and tougher user acquisition dynamics. If persistent, slower top‑line growth constrains long‑term EPS expansion and increases pressure on management to offset with cost cuts or portfolio diversification.

Weakness outside core games

Underperformance in Cloud Music and innovative businesses highlights limited diversification traction. Persistent softness in these segments reduces revenue optionality and makes NetEase more dependent on core gaming cycles, increasing exposure to hit‑driven volatility over the medium term.

Leadership transition in games unit

Retirement of a long‑serving games leader creates execution risk in R&D and franchise stewardship during a sensitive product cycle. Even with consulting support, this change could affect development continuity and release timing, posing medium‑term risk to franchise performance and pipeline delivery.

NetEase Business Overview & Revenue Model

Company Description

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally. The company operates through Games and Related Value-Added Services; Youdao; Cloud Music; and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, and Youdao Listening Pod; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.

How the Company Makes Money

NetEase generates revenue primarily through its online gaming segment, which includes both PC and mobile games. The company earns money from game sales, in-game purchases, subscriptions, and virtual goods. Additionally, NetEase has a growing e-commerce business that contributes to its revenue through the sale of products ranging from cosmetics to groceries. Advertising services also provide a significant revenue stream, with brands utilizing NetEase's platforms to reach a large audience. Furthermore, educational services and other digital content offerings, including music streaming, add to the company's diversified revenue model. Strategic partnerships, such as those with international game developers, enhance its gaming library and market presence, while investments in new technology and content innovation support ongoing growth.

NetEase Financial Statement Overview

Summary

High-quality fundamentals: expanding profitability (gross margin up to ~64% and net margin ~30% by 2025), very strong and de-risked balance sheet (debt down sharply to ~6.4B and ~0.04x debt/equity), and robust free cash flow generation that broadly tracks earnings. The main offset is slowing/negative revenue trajectory into 2025, which can limit forward earnings growth.

Income Statement

NetEase shows strong profitability with expanding margins: gross margin improved from ~52.9% (2020) to ~64.3% (2025), while net margin rose from ~16.4% to ~30.0%, alongside higher EBIT/EBITDA margins. Net income also scaled meaningfully over the period (2020–2025). The main weakness is growth: revenue momentum slowed materially from strong growth earlier in the cycle to roughly flat in 2024 and a decline in 2025, signaling a more mature/pressured top-line environment despite solid execution on profitability.

Balance Sheet

The balance sheet is very strong and de-risking: total debt fell sharply from ~28.5B (2022) to ~6.4B (2025), driving debt relative to equity down to ~0.04x by 2025. Equity increased steadily (2020–2025), supporting a larger asset base while keeping leverage low. Returns remain healthy (return on equity around ~20% in 2024–2025). A watch item is that returns peaked earlier (2023) and have eased modestly since, but overall leverage and capital strength are clear positives.

Cash Flow

Cash generation is robust and improving: operating cash flow increased from ~24.9B (2020) to ~49.4B (2025) and free cash flow rose to ~48.3B (2025), with positive free-cash-flow growth in recent years. Free cash flow closely tracks earnings (free cash flow to net income ~0.88–0.98 across the period), indicating good earnings quality. The primary weakness is that cash flow relative to earnings, while improving, was weaker earlier and still sits below 1.0 in 2025, suggesting some ongoing working-capital or cash conversion variability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	109.56B	105.30B	103.47B	96.50B	87.61B
Gross Profit	70.43B	65.81B	63.06B	52.77B	46.97B
EBITDA	37.04B	32.00B	30.76B	22.49B	19.69B
Net Income	32.84B	29.70B	29.42B	20.34B	16.86B
Balance Sheet
Total Assets	221.56B	195.99B	185.92B	172.76B	153.64B
Cash, Cash Equivalents and Short-Term Investments	167.04B	137.58B	126.72B	117.46B	97.53B
Total Debt	6.39B	12.82B	20.48B	28.46B	21.69B
Total Liabilities	56.35B	53.50B	57.84B	63.89B	54.37B
Stockholders Equity	160.40B	138.69B	124.29B	104.73B	95.33B
Cash Flow
Free Cash Flow	48.32B	37.47B	31.06B	25.07B	21.82B
Operating Cash Flow	49.36B	39.68B	35.33B	27.71B	24.93B
Investing Cash Flow	-32.18B	17.92B	-17.04B	-7.37B	-7.08B
Financing Cash Flow	-19.71B	-27.34B	-21.47B	-10.24B	-12.59B

NetEase Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 117.18
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTES, the sentiment is Negative. The current price of 117.18 is below the 20-day moving average (MA) of 123.16, below the 50-day MA of 132.35, and below the 200-day MA of 134.63, indicating a bearish trend. The MACD of -4.59 indicates Positive momentum. The RSI at 32.14 is Neutral, neither overbought nor oversold. The STOCH value of 22.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NTES.

NetEase Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTES	74 Outperform	$70.42B	15.96	22.36%	2.19%	5.69%	32.87%
EA	70 Outperform	$50.30B	75.27	10.03%	0.37%	-1.45%	-11.99%
PLTK	66 Neutral	$1.15B	13.56	―	9.98%	7.49%	-60.32%
BILI	65 Neutral	$12.27B	115.71	5.30%	―	16.84%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
TTWO	57 Neutral	$37.81B	-9.13	-86.22%	―	13.98%	-6.71%
RBLX	52 Neutral	$47.55B	-43.52	-345.84%	―	32.70%	12.57%
BKSY	49 Neutral	$709.41M	-6.30	-88.03%	―	-5.13%	-37.34%

NetEase Corporate Events

NetEase Announces Retirement of Long-Serving Games Executive and Leadership Change in Core Entertainment Unit

On December 26, 2025, NetEase, Inc., the Chinese internet and gaming company listed on Nasdaq and the Hong Kong Stock Exchange, announced that Yingfeng Ding will retire as Executive Vice President and head of the Interactive Entertainment Group, part of its core online games division, effective December 31, 2025, after a 23-year tenure in which he played a key role in building the group’s flagship titles and R&D and operational capabilities. The company emphasized Ding’s pivotal contribution to its gaming success and noted that he will remain as a consultant through 2026, a move that suggests continuity in strategic and product development during a sensitive leadership transition in one of NetEase’s most critical business units.

The most recent analyst rating on (NTES) stock is a Buy with a $161.00 price target. To see the full list of analyst forecasts on NetEase stock, see the NTES Stock Forecast page.