Goldman Sachs Upgrades Chinese Lidar Supplier Hesai, Predicting Significant Growth

Wall Street giant Goldman Sachs has issued a bullish upgrade for Hesai, a leading Chinese supplier of lidar technology for autonomous vehicles and advanced driver-assistance systems (ADAS). Analyst Tina Hou upgraded Hesai to a “buy” rating from “neutral,” significantly raising her price target to $18.40—representing a potential 34.9% upside from Monday’s closing price. This optimistic outlook follows a recent downgrade from Morgan Stanley, highlighting the divergence in analyst sentiment surrounding this key player in the rapidly expanding lidar market. The upgrade reflects Goldman’s confidence in Hesai’s long-term prospects, fueled by anticipated growth in China’s electric vehicle (EV) sector and the launch of its next-generation lidar products. This move underscores the escalating importance of lidar technology in the automotive industry and the intense investor interest in companies poised to benefit from the autonomous driving revolution.

Key Takeaways: Why Goldman Sachs is Bullish on Hesai

• Goldman Sachs upgraded Hesai to “buy” from “neutral,” significantly raising its price target to $18.40. This signifies strong confidence in the company’s future performance.
• Hesai holds a dominant 37% market share in the global lidar industry in 2023 (according to Goldman Sachs). This market leadership position provides a strong foundation for future growth.
• The upgrade anticipates a surge in demand driven by the accelerating adoption of Navigation on Autopilot (NOA) features in Chinese EVs starting in 2025. This represents a major growth catalyst for Hesai.
• Hesai’s new product cycle and the launch of lower-cost products are expected to drive increased lidar adoption in mass-market vehicles. This will broaden Hesai’s customer base and revenue streams.
• Goldman Sachs believes Hesai’s stock is undervalued, trading at 20 times 2026 earnings compared to the global smart EV supplier average of 30 times. This suggests a compelling investment opportunity.

Hesai’s Position in the Growing Lidar Market

Hesai is a prominent player in the rapidly evolving lidar market, providing high-performance lidar technology for a range of applications, including autonomous vehicles, ADAS, and industrial robots. Lidar, which uses laser pulses to create three-dimensional maps of the surrounding environment, is a crucial component for enabling self-driving capabilities and enhancing driver safety features. Goldman Sachs highlights Hesai’s impressive 37% market share in 2023, a testament to the company’s technological prowess and strong market position.

The Importance of Lidar in Autonomous Driving

The increasing sophistication of autonomous driving features is driving significant demand for lidar technology. Lidar’s ability to accurately perceive the environment, even in challenging conditions, is essential for safe and reliable autonomous navigation. As vehicles become more autonomous, the need for high-quality lidar solutions will only intensify, creating a compelling growth opportunity for companies like Hesai.

The Catalyst for Goldman Sachs’ Upgrade: NOA Adoption and New Product Cycle

Goldman Sachs’ bullish outlook is primarily driven by two key factors: the anticipated surge in Navigation on Autopilot (NOA) adoption in China’s expanding electric vehicle market and the launch of Hesai’s next-generation lidar products. The firm predicts a remarkable 67% year-over-year growth in NOA vehicle equipment from 2025 to 2030, as ADAS technology enters a significant “take-off” phase. This projected growth will directly benefit Hesai, as its lidar technology is integral to enabling NOA functionality.

Hesai’s Next-Generation Lidar: The ATX Platform

Hesai is also entering the “harvesting stage” of its three-year product cycle for its next-generation platform lidar product, called ATX. This new platform is expected to offer significant improvements in performance, cost-effectiveness, and scalability, further solidifying Hesai’s competitive advantage. The launch of the ATX platform is viewed by Goldman Sachs as another significant catalyst for Hesai’s share price growth. The introduction of a lower-cost product line will expand the market reach by allowing the integration of Lidar into mass-market vehicles.

Analyst Sentiment and Valuation

While Goldman Sachs’ upgrade is positive, it’s important to note that analyst sentiment on Hesai remains somewhat mixed. While LSEG data indicates that nine out of ten analysts covering the stock rate it as a buy or strong buy, the average analyst price target suggests a 31% downside. This divergence highlights the uncertainty inherent in predicting the future performance of a company operating in a rapidly evolving technological landscape.

Hesai’s Valuation and Growth Potential

Goldman Sachs argues that Hesai’s current valuation is attractive, trading at 20 times 2026 earnings, below the global smart EV supplier average of 30 times. This suggests that the market may not yet fully appreciate Hesai’s growth potential, a key reason behind the upgrade. The analyst believes the market hasn’t factored the operating leverage that Hesai should achieve with its new product cycle.

Contrasting Views: Morgan Stanley’s Downgrade

The Goldman Sachs upgrade comes on the heels of a downgrade from Morgan Stanley, which expressed concerns about Hesai’s limited upside despite its robust project pipeline. This divergence underscores the inherent challenges in accurately forecasting the performance of companies in the dynamic autonomous vehicle sector. While Morgan Stanley acknowledges Hesai’s strong pipeline, it apparently believes that the market’s valuation already reflects this.

Hesai’s Recent Performance and Future Outlook

Hesai has demonstrated strong performance in recent times, with its stock price rising 55% in 2024. This positive trajectory, coupled with Goldman Sachs’ optimistic forecast, suggests that the company is well-positioned for continued growth. However, investors should remain mindful of the inherent risks associated with investing in a high-growth technology company operating in a competitive market.

Long-Term Growth Potential

The long-term outlook for Hesai depends on several factors, including the continued growth of the Chinese EV market, the successful adoption of NOA features, the market reception of the ATX platform, and its ability to maintain its technological leadership in the constantly evolving lidar market.

In conclusion, Goldman Sachs’ upgrade of Hesai represents a vote of confidence in the company’s long-term prospects. While analyst sentiment remains mixed, the anticipated growth in NOA adoption, the launch of Hesai’s next-generation lidar products, and its strong market position suggest a compelling investment opportunity for those with a high-risk tolerance and long-term investment horizon. However, investors must acknowledge the inherent uncertainty within this evolving technological landscape. The future success of Hesai will ultimately depend on its ability to execute its strategic plan and maintain its competitive edge.