Hesai Group: Lidar Leader Poised for Liftoff as Institutions Double Down on Undervalued Growth

The autonomous driving revolution is here, and at its vanguard is Hesai Group (NASDAQ:HSAI), a lidar innovator delivering record financial results and strategic wins while flying under the radar of many investors. Amid narrowing losses, surging institutional ownership, and a valuation gap relative to peers, HSAI presents a compelling opportunity to capitalize on the $50 billion lidar market's growth.

Financial Turnaround: Profitability in Sight

Hesai's Q1 2025 results marked a pivotal shift toward profitability. Net revenues surged 46.3% year-over-year to RMB525.3 million (US$72.4 million), driven by a tripling of lidar shipments to 195,818 units, with ADAS systems now powering over 120 vehicle models for OEMs like Chery, Great Wall, and Zeekr. Notably, the company cut its net loss by 84% to RMB17.5 million, while achieving non-GAAP net income of RMB8.6 million—its first profitable quarter under this metric.

The margin story is equally strong. Gross margin expanded to 41.7%, reflecting cost discipline and scale advantages. Even as HSAI invests heavily in R&D (the largest IP portfolio among peers), its cash reserves remain robust at RMB2.86 billion, ensuring it can fund growth without dilution.

Institutional Backing: A Vote of Confidence

While retail investors may overlook HSAI, institutions are doubling down. As of Q1 2025, 45% of shares are institutionally owned, with top 14 shareholders holding 51% collectively. Notable inflows include:
- Healthcare of Ontario Pension Plan (+61% stake)
- D. E. Shaw (+17%)
- Citigroup, JPMorgan, and Morgan Stanley (all adding multi-million-dollar positions)

While some funds like Lightspeed and Bosch trimmed stakes, the net result is a consolidation of ownership among strategic players. This concentration suggests HSAI's growth narrative is resonating with long-term investors.

Valuation: A Lidar Darling at a Discount

Despite its momentum, HSAI trades at a P/S ratio of 9.8x, below its lidar peers' average of 13.5x and far below overhyped rivals like WeRide (51x). Analysts see 11.5% upside to the $23.91 consensus target, but the real case is undervaluation relative to its trajectory:
- EV/Revenue of 8.6x vs. the broader auto components sector's 0.6x—reflecting HSAI's premium growth profile.
- Non-GAAP profitability achieved in Q1 hints at a path to full-year earnings.

Why Lidar's Future Belongs to HSAI

1. Technology Leadership: Its AT1440 lidar (45x denser point cloud than rivals) and Infinity Eye Solution (tailored for L2-L4 autonomy) set new industry benchmarks.
2. Global Expansion: A $394 million robotics deal with a top Chinese smart home firm and a Japanese Tier 1 partnership signal diversification beyond automotive.
3. IP Resolve: Victory in Ouster's litigation removes a key overhang, reinforcing HSAI's 1,500+ patents as a moat.

Risks, but Momentum Outweighs Them

Tariffs and semiconductor shortages pose headwinds, but HSAI's Q2 revenue guidance (48-57% growth) and 2025 full-year profitability target suggest it's outpacing challenges. However, historical data reveals risks tied to short-term trading strategies. A backtest of buying HSAI on the announcement date of quarterly earnings releases and holding for 20 trading days from 2020 to 2025 showed an average return of -22.9%, with a maximum drawdown of -47.5%. This underscores the potential volatility of such timing strategies, though HSAI's current trajectory and institutional support argue for a longer-term view.

Backtest the performance of HSAI (Hesai Group) when buying on the announcement date of quarterly earnings releases and holding for 行20 trading days, from 2020 to 2025.

The Bottom Line: Buy Now Before the Market Catches On

Hesai Group is a growth stock in disguise—its fundamentals are aligning with a valuation that hasn't kept pace. With institutions voting with their wallets and a lidar market poised to triple by 2030, HSAI is primed for a breakout. Investors should act swiftly: add HSAI to your portfolio before its $23.91 target becomes the new floor.

The autonomous era isn't just around the corner—it's here. Hesai's lidar technology is fueling it, and its stock is the fuel to profit from it.