Goldman Sachs keeps a Buy on Hesai Group: core LiDAR business remains solid, SGI begins a second growth curve

Overview

This report is Goldman Sachs' company research and conference notes after Hesai Group's 1Q26 earnings call. The core view is that Hesai Group's core LiDAR business remained resilient despite a weak start to the year in China's auto market; global OEM partnerships, L3 autonomous-driving upgrades, and technological innovation support medium-term shipment growth. At the same time, the company is entering the Strategic Growth Initiatives (SGI) business through KOSMO spatial intelligence devices and robotics actuation modules, attempting to extend from spatial perception to spatial intelligence and open a second growth curve.

Core views

Goldman Sachs maintains a Buy rating on Hesai Group. In the short term, management kept 2026 shipment guidance at 3.0 million to 3.5 million units and gross margin guidance at about 40%; 2Q26 revenue guidance is Rmb850mn to Rmb900mn and LiDAR shipment guidance is 650,000 units, indicating operating resilience. In the medium term, overseas OEM design wins, the Mercedes-Benz L3 autonomous-driving collaboration, GAC Toyota's 2026 bZ3X design win, and Xiaomi's overseas model 2027 SOP should improve visibility on global expansion. In the long term, KOSMO and robotics actuation modules could generate recurring revenue from software, platform usage, data processing, model training, and cloud services, with potential margins above traditional hardware.

Analysis framework

The report analyzes 1Q26 results, management guidance from the earnings call, product launches, global OEM design wins, higher per-vehicle LiDAR content value, SGI revenue targets, and valuation multiples. Goldman Sachs incorporated SGI revenue into its 2026E-2030E model and raised 2026E-2030E net profit forecasts by up to 14%, while keeping the 12-month target price unchanged.

Methodology notes

• Valuation method20x 2030E EPS discounted back to 2026E

  The target price is based on 20x the 2030E non-GAAP EPS and discounted back to 2026E using an 11% cost of equity.

  Goldman Sachs keeps the 12-month target price at ADR US$35 and H-share HK$273; the valuation framework emphasizes long-term earnings power, scale effects, and growth realization from 2026E onward.

• Factor frameworkGS Factor Profile

  Goldman Sachs' factor profile compares stocks with the market and industry peers across Growth, Financial Returns, Multiple, and Integrated dimensions.

  The framework uses analyst forecasts for sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples to form percentile rankings, which are used to provide investment context rather than independently determine the rating.

• M&A frameworkM&A Rank

  Goldman Sachs evaluates the probability that a company becomes an M&A target through qualitative and quantitative factors, and classifies it into levels 1 to 3.

  The report discloses Goldman Sachs' standard M&A Rank methodology, but this target price discussion for Hesai Group is mainly based on earnings forecasts and P/E discounting, and does not emphasize M&A factors.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hesai Group H-share (2525.HK) / ADR (HSAI)

  Core coverage name; Goldman Sachs maintains a Buy rating.

  Strengths

  Leading LiDAR market share, diversified customer base, more global OEM design wins, improving operating leverage, and SGI providing a second growth curve.

  Weaknesses

  ASP declines, product-mix changes, and weak Chinese auto demand may pressure gross margin; SGI revenue visibility remains limited in the early stage.

  Comparison

  Current ADR trades at about 30x/21x 2026E/2027E P/E, below the company's roughly 37x average 12-month forward P/E since it turned profitable in 4Q24, while Goldman Sachs expects about 40% CAGR in net profit for 2025-2027E.

  Risks

  Slower-than-expected LiDAR adoption, intensifying competition, customer price pressure, policy risk, delayed OEM volume production, and SGI commercialization falling short of expectations.

• Core LiDAR business

  Main business and earnings base.

  Strengths

  Benefiting from L3 autonomous driving, NOA adoption, overseas ADAS design wins, and robot/robotaxi demand; 2026 shipment guidance remains 3.0 million to 3.5 million units.

  Weaknesses

  Automotive price competition may drive ASP lower, and product-mix changes may affect gross margin.

  Comparison

  From L2 to L3, per-vehicle LiDAR content value rises from about US$200 to US$350+, with potential to reach US$500 to US$1,000.

  Risks

  Automaker cost-cutting, production delays, changes in technical routes, or competition from alternative sensor solutions.

• SGI business: KOSMO and robotics actuation modules

  Second growth curve and strategic extension from spatial perception to spatial intelligence.

  Strengths

  KOSMO combines high-precision LiDAR, 3DGS, and AIGC algorithms to generate photo-realistic 3D environments; software and platform usage may generate recurring revenue and higher margins.

  Weaknesses

  The business is still early-stage, with lower visibility on orders and revenue growth after 2027.

  Comparison

  Management targets about Rmb100mn in 2026, Rmb500mn in 2027, and long-term growth to a scale close to the core LiDAR business.

  Risks

  Physical-AI data demand under-delivers, product launches are delayed, customer adoption is slow, and the monetization models for model training and cloud services remain immature.

Key data

• 1Q26 performanceRevenue and gross margin were in line with expectations; EBIT was 47%/63% above GSe/VA consensusThe beat mainly came from lower operating expenses.
• 2026 shipment guidance3.0 million to 3.5 million unitsManagement kept full-year guidance despite a weak start to the year in China's auto demand.
• 2026 gross margin guidanceAbout 40%Goldman Sachs assumes a 2026E gross margin of 40%, below 2025's 41.8%, mainly due to product mix and ASP pressure.
• 2026E revenue growth50%Supported by 101% y/y LiDAR shipment growth, partly offset by a 27% y/y decline in blended ASP.
• 2026E EBIT growth139% y/yGoldman Sachs expects operating leverage to lift EBIT margin from 9% in 2025 to 15% in 2026E.
• 2Q26 revenue guidanceRmb850mn to Rmb900mnThe midpoint implies 25% y/y / 29% q/q growth.
• 2Q26 LiDAR shipment guidance650,000 unitsCorresponding to 85%/38% y/y/q/q growth.
• SGI revenue targetAbout Rmb100mn in 2026; target of Rmb500mn in 2027The long-term goal is to grow to a scale close to the core LiDAR business.
• L3 per-vehicle LiDAR content valueAbout US$350+, above about US$200 for L2; potentially reaching US$500 to US$1,000Management believes L3 autonomous driving will increase per-vehicle LiDAR content value.
• Global market share33% global LiDAR revenue share in 2024; 61% global robotaxi market shareThe report uses this to highlight the company's leadership in ADAS, autonomous mobility, and robotics applications.
• Target price and upsideADR US$35 / H-share HK$273; upside 73%/72%Target price unchanged.
• Current valuationADR about 30x/21x 2026E/2027E P/EGoldman Sachs sees this as attractive relative to the company's roughly 40% CAGR in net profit for 2025-2027E and its roughly 37x average 12-month forward P/E since turning profitable after 4Q24.

Impact & implications

The report is constructive for Hesai Group's investment case: the core LiDAR business continues to be driven by vehicle intelligence, NOA penetration, L3 autonomous driving, and overseas design wins; if SGI delivers, it could improve revenue mix quality and margins and expand the company from a hardware perception supplier into a participant in spatial intelligence and physical AI data platforms. However, SGI is still in the early stage, and growth visibility after 2027 remains limited, which is why Goldman Sachs uses a slower growth profile in its model.

Risks

• LiDAR adoption is slower than expected.
• Industry competition intensifies.
• Customer price pressure weighs on ASP and gross margin.
• Policy risk affects autonomous driving, data, or overseas expansion.
• OEM new-model launches or volume production are delayed.
• SGI orders, revenue, and recurring-revenue model monetization fall short of expectations.

What to watch

• Progress in the Mercedes-Benz L3 autonomous-driving collaboration and support for overseas deliveries from the Galileo manufacturing center in Thailand.
• The pace of commercialization for GAC Toyota's 2026 bZ3X and Xiaomi's overseas model 2027 SOP design wins.
• Whether 2Q26 and later quarterly LiDAR shipments, revenue, gross margin, and EBIT margin improve quarter on quarter as Goldman Sachs expects.
• KOSMO orders, software/platform usage revenue, and the share of recurring revenue from data processing, model training, and cloud services.
• The launch timing, customer validation, and commercialization progress of robotics actuation modules.
• NOA penetration in China's NEV market, L3 regulation, and changes in global robotaxi and robotics demand.