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NetEase
(NASDAQ:NTES)
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Rating:77Outperform
Price Target:
$147.00
▲(22.96% Upside)
Action:Reiterated
Date:05/22/26
NTES scores well primarily on strong financial performance (high margins, strong cash conversion, and low leverage) and a constructive earnings update with improving margins and continued capital returns. The score is tempered by mixed technicals (below longer-term moving averages) and only moderate valuation support at a ~24.6 P/E despite a ~2.6% dividend yield.
Positive Factors
High profitability & margins
Sustained high gross and net margins give NetEase durable operating leverage and cash generation capacity. Strong margins fund live-service content, R&D and marketing without heavy leverage, helping the company sustain investment cycles and absorb weaker quarters while preserving returns.
Negative Factors
Revenue growth volatility
NetEase's earnings and revenue are hit-driven and subject to content/timing swings. This cyclicality complicates multi-quarter forecasting and can produce uneven cash flows, pressuring near-term growth expectations despite strong structural profitability and cash balance.
Read all positive and negative factors
Positive Factors
Negative Factors
High profitability & margins
Sustained high gross and net margins give NetEase durable operating leverage and cash generation capacity. Strong margins fund live-service content, R&D and marketing without heavy leverage, helping the company sustain investment cycles and absorb weaker quarters while preserving returns.
Read all positive factors
NetEase Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows how much each business unit contributes to total sales, providing insight into diversification, growth areas, and potential vulnerabilities in revenue streams.
Shows how much each business unit contributes to total sales, providing insight into diversification, growth areas, and potential vulnerabilities in revenue streams.
Data provided by:
The Fly
The FlyNetEase (NTES) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$82.70B
Dividend Yield2.29%
Average Volume (3M)990.49K
Price to Earnings (P/E)16.1
Beta (1Y)0.56
Revenue Growth8.50%
EPS Growth7.29%
CountryUS
Employees25,382
SectorCommunication Services
Sector Strength97
IndustryElectronic Gaming & Multimedia
Share Statistics
EPS (TTM)53.35
Shares Outstanding643,912,900
10 Day Avg. Volume1,043,266
30 Day Avg. Volume990,488
Financial Highlights & Ratios
PEG Ratio1.30
Price to Book (P/B)3.83
Price to Sales (P/S)5.45
P/FCF Ratio12.71
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$155.33Price Target Upside29.93% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)64.66
Revenue Forecast (FY)$120.70B
NetEase Business Overview & Revenue Model
Company Description
NetEase, Inc., a prominent technology firm founded in 1997 and headquartered in Hangzhou, People's Republic of China, delivers a broad spectrum of online services both within China and across international markets. Its core operations encompass on...
How the Company Makes Money
NetEase primarily makes money by monetizing its interactive entertainment portfolio. The largest revenue stream is typically online game services, where the company earns revenue from in-game purchases (virtual items, battle passes, character/skin...
NetEase Earnings Call Summary
Earnings Call Date:May 21, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 13, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive operating and financial picture driven by strong games performance: solid revenue growth, improved gross margins, stable non-GAAP profitability, rising cash resources, and multiple title-level successes (global hits, anniversary/announced milestones, and pipeline progress). Offsetting risks include declines in certain non-games segments (Cloud Music, innovative business/e-commerce and advertising), elevated marketing spend, and intensified competition in the open-world category. On balance, the strengths in the core games business and margin/cash improvements materially outweigh the headwinds in other segments.Positive Updates
Total Revenue and Growth
Total net revenue of RMB 30.6 billion in Q1 2026, representing a ~6% year-over-year increase. Games and related value-added services drove the majority of revenue at RMB 25.7 billion (up 7% YoY).
Negative Updates
NetEase Cloud Music Revenue Decline
NetEase Cloud Music net revenue was RMB 2.0 billion, representing a 7% year-over-year decrease and broadly stable quarter-over-quarter, highlighting softness in that segment.
Read all updates
Q1-2026 Updates
Positive
Negative
Total Revenue and Growth
Total net revenue of RMB 30.6 billion in Q1 2026, representing a ~6% year-over-year increase. Games and related value-added services drove the majority of revenue at RMB 25.7 billion (up 7% YoY).
Read all positive updates
Company Guidance
Management's guidance and commentary emphasized a strong start to 2026 with Q1 total revenue of RMB 30.6 billion (reported as a 6% YoY increase), driven by games and related VAS net revenues of RMB 25.7 billion (up 7% YoY) and online games revenue of RMB 25.1 billion (up 18% QoQ and 7% YoY); Youdao revenue rose to RMB 1.3 billion (+4% YoY), NetEase Cloud Music was RMB 2.0 billion (−7% YoY), and innovative business & others were RMB 1.5 billion (−5% YoY, −24% QoQ). Profitability metrics improved: consolidated gross margin expanded to 69.4% (games margin 74.8% vs 68.8% a year ago; Youdao 44.7%; Cloud 37.1%; innovative 42.0%), operating expenses were RMB 8.6 billion (28% of revenue) with S&M at 11.2%, G&A 2.1% and R&D 14.7% of revenue, non‑GAAP net income was RMB 11.3 billion (≈USD 1.6 billion) with non‑GAAP EPS ~USD 0.51 per ADS, net cash of RMB 167.2 billion (vs RMB 153.5 billion at end‑2025), a Q1 dividend approved (USD 0.44 per share), and continued buybacks under the USD 5 billion repurchase program (repurchases reported at 23.2 million for a total cost of ~USD 3.1 billion) — all cited as supporting continued investment in content, globalization and long‑term live‑service operations.NetEase Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
92
Very Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 114.39B | 112.63B | 105.30B | 103.47B | 96.50B | 87.61B |
| Gross Profit | 75.14B | 72.40B | 65.81B | 63.06B | 52.77B | 46.97B |
| EBITDA | 43.94B | 43.07B | 38.14B | 37.11B | 27.11B | 24.38B |
| Net Income | 34.13B | 33.76B | 29.70B | 29.42B | 20.34B | 16.86B |
Balance Sheet | ||||||
| Total Assets | 231.40B | 221.56B | 195.99B | 185.92B | 172.76B | 153.64B |
| Cash, Cash Equivalents and Short-Term Investments | 170.90B | 167.04B | 137.58B | 126.72B | 117.46B | 97.53B |
| Total Debt | 10.96B | 6.39B | 12.82B | 20.48B | 28.46B | 21.69B |
| Total Liabilities | 62.05B | 56.35B | 53.50B | 57.84B | 63.89B | 54.37B |
| Stockholders Equity | 164.72B | 160.40B | 138.69B | 124.29B | 104.73B | 95.33B |
Cash Flow | ||||||
| Free Cash Flow | 50.30B | 48.32B | 37.47B | 31.06B | 25.07B | 21.82B |
| Operating Cash Flow | 52.02B | 49.36B | 39.68B | 35.33B | 27.71B | 24.93B |
| Investing Cash Flow | -28.19B | -32.18B | 17.92B | -17.04B | -7.37B | -7.08B |
| Financing Cash Flow | -13.60B | -19.71B | -27.34B | -21.47B | -10.24B | -12.59B |
NetEase Technical Analysis
Positive
119.55
Price Trends
124.48
Positive
119.22
Positive
125.93
Positive
Market Momentum
0.12
Positive
40.29
Neutral
4.63
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTES, the sentiment is Positive. The current price of 119.55 is below the 20-day moving average (MA) of 128.64, below the 50-day MA of 124.48, and below the 200-day MA of 125.93, indicating a bullish trend. The MACD of 0.12 indicates Positive momentum. The RSI at 40.29 is Neutral, neither overbought nor oversold. The STOCH value of 4.63 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NTES.
NetEase Risk Analysis
NetEase disclosed 94 risk factors in its most recent earnings report. NetEase reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
NetEase Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $82.70B | 16.14 | 21.64% | 2.53% | 8.50% | 7.29% | |
69 Neutral | $52.73B | 58.84 | 14.19% | 0.36% | 1.72% | -17.04% | |
65 Neutral | $7.83B | 53.40 | 8.04% | ― | 11.20% | ― | |
63 Neutral | $46.08B | -153.25 | -8.57% | ― | 18.16% | 93.64% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
55 Neutral | $1.53B | -5.16 | 113.59% | 10.87% | 7.30% | -307.46% | |
53 Neutral | $35.89B | -31.33 | -288.77% | ― | 38.10% | -16.91% | |
51 Neutral | $843.39M | -8.59 | -98.63% | ― | -8.93% | 1.81% |
* Communication Services Sector Average
NTES
NetEase
131.90
7.61
6.12%
EA
Electronic Arts
209.59
53.13
33.95%
TTWO
Take-Two
247.43
26.85
12.17%
BILI
Bilibili
18.70
-3.19
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BKSY
BlackSky Technology
22.46
3.60
19.09%
PLTK
Playtika Holding
3.97
-0.07
-1.85%
RBLX
Roblox
48.67
-76.36
-61.07%
NetEase Corporate Events
NetEase Confirms Stable Share Capital in First Monthly Return After Hong Kong Primary Listing
Jul 7, 2026
NetEase, Inc., a major Chinese online entertainment and technology company listed in Hong Kong under stock code 09999, reported no changes in its authorized or issued share capital for the month ended 30 June 2026. The company maintained 1,000,300...
NetEase Sets June 30, 2026 for Conversion to Dual-Primary Listing in Hong Kong
Jun 25, 2026
NetEase has announced that, following a notice from the Hong Kong Stock Exchange on February 27, 2026 confirming that the majority of trading in its shares had permanently migrated to Hong Kong, it will convert from a secondary to a dual-primary l...
NetEase Sets June 23, 2026 AGM to Vote on Board, Auditors and Governance Changes
May 18, 2026
NetEase has called its 2026 annual general meeting of shareholders for June 23, 2026 in Hangzhou, where investors will vote on the re-election of six directors, including CEO William Lei Ding, and on the appointment of PricewaterhouseCoopers entit...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.