Just one month ago, Hesai Group’s (NASDAQ:HSAI) stock was down 50% for the year. Surprisingly, it is poised to end the year up well over 50%. In the last month alone, the stock has tripled, turning the tables on what was proving to be a horrible year for investors.
Hesai Group (NASDAQ:HSAI) is primarily involved in the development and production of LiDAR systems for two major industries: automotive and robotics. The company is based in Shanghai and has had a tough time since its IPO in February 2023. It has experienced a downturn since then and despite the recent rally, still hasn’t reached the IPO price. It serves customers in over 40 countries across North America, Europe, and Asia.
The firm has struck some amazing deals in the last few weeks. For instance, it became the exclusive supplier of Light Detection and Ranging (LiDAR) equipment for Great Wall Motor and Changan Automobile recently. The deal positioned the company well to gain market share in a growing but competitive market.
This good news helped the stock rally to 52-week highs and beyond, but we now know that this wasn’t just hype. Earlier today, the company announced it had delivered over 100,000 LiDAR units in December. The company has a strong production base and can hit the 2 million mark in 2025, provided the demand stays strong.
An interesting point to note in these delivery numbers is that the company delivered 20,000 units for the robotics market in December. This would suggest that the robotics market is going strong in China, in addition to the autonomous driving market which is going from strength to strength. China seems to be on a mission to achieve autonomy on both roads and industry before the US and Hesai Group seems to be an integral part of that mission. In contrast, autonomy in the US continues to face regulatory hurdles with both Tesla (TSLA) and Alphabet’s (GOOG) Waymo facing tough scrutiny in the country to ensure the safety of passengers in autonomous vehicles.
We are bullish on the stock and believe the story may just have started to play out. On the valuation front, a lot of good news is already priced in but considering the fact that it is still below the IPO price, one could take a position in case the rally is only just starting.
Hesai Group (NASDAQ:HSAI) is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held HSAI at the end of the third quarter which was 4 in the previous quarter. While we acknowledge the potential of HSAI as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as HSAI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.