JD delivered a solid Q1, with profits exceeding expectations; Bernstein maintained Outperform and raised the target price to US$40/HK$155

Overview

This report is Bernstein’s commentary on JD.com Inc.’s first-quarter results. It argues that JD’s core Q1 metrics were solid overall: revenue, gross profit, non-GAAP operating profit, and non-GAAP EPS all beat market expectations. Although the Chinese e-commerce consumption environment remains subdued and investors still have concerns over food-delivery spending, general merchandise growth, and whether 2027 profitability can normalize to prior levels, management remains confident on full-year profit guidance. Low valuation, capital returns, and improving revenue form support for the stock.

Core views

The central thesis is that JD has been "doing the right things": on the one hand, JD Retail margins continued to improve, general merchandise revenue kept growing at a relatively fast pace, and marketing and advertising revenue accelerated; on the other hand, New Business losses narrowed materially, easing concerns that food delivery, internationalization, and AI investment would continue to weigh on profitability. The report remains constructive on JD shares, arguing that even if Q2 issues could cause near-term sideways trading, JD is becoming a clearer, cheaper, and more visible capital-return story in the Chinese internet sector.

Analysis framework

The report uses earnings comparison, segment decomposition, profit bridge, and valuation roll-forward methods: it compares Q1 actual revenue, gross profit, operating profit, net profit, and EPS against Bernstein forecasts and consensus expectations; decomposes performance across electronics and appliances, general merchandise, marketplace and advertising, logistics, and New Businesses; and updates the target price using a 9x FY+1 PE multiple.

Methodology notes

• Earnings CommentaryActuals vs Bernstein Forecast vs Market Consensus

  Compares deviations in revenue, gross profit, operating profit, net profit, and EPS relative to forecast

  Q1 revenue, gross profit, non-GAAP operating profit, and EPS were all above forecasts, with non-GAAP operating profit meaningfully above expectations, which is the core reason the report is constructive.

• Segment AnalysisBreakdown by Segment Revenue and Profit

  Assesses growth quality by splitting out electronics and appliances, general merchandise, marketing and advertising, logistics, and New Businesses

  Electronics and appliances declined year-over-year due to a high base and subsidy effects, while general merchandise, marketing and advertising, and logistics remained positive; narrowed New-Business losses improved group profitability.

• Valuation methods9x FY+1 PE

  PE valuation anchored to FY+1 earnings derived from the rolling next four quarters

  The report states that the updated JD target price is based on an unchanged 9x FY+1 PE multiple, and it was raised to US$40/HK$155 after rolling profit forward one quarter.

Asset mapping & comparison

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

• JD.com Inc. / JD / 9618.HK

  Covered name; Bernstein maintains an Outperform rating and raised the target price

  Strengths

  Revenue and gross profit beat expectations, JD Retail margin improvement, narrowing New-Business losses, and support from low valuation and buybacks.

  Weaknesses

  Electronics and appliances revenue declined year-over-year, and group non-GAAP operating profit and EPS were still down year-over-year; New-Businesss such as food delivery remain loss-making.

  Comparison

  Q1 revenue was 0.6% above Bernstein forecast and 1.4% above market consensus; non-GAAP operating profit was 116.7% above market consensus.

  Risks

  Weak macro and consumption conditions, user activity volatility, fulfillment costs and investment, internet-platform competition, regulatory risk, and ongoing New-Business losses.

Key data

• Q1 2026 RevenueRMB315.7bnUp 4.9% year-over-year, 1.4% above market consensus.
• Q1 2026 Gross ProfitRMB53.0bnUp 10.8% year-over-year, with a gross margin of 16.8%.
• Q1 2026 Non-GAAP Operating ProfitRMB5.6bn95.4% above Bernstein forecast and 116.7% above market consensus.
• Q1 2026 Non-GAAP Net ProfitRMB7.4bn38.1% above market consensus.
• Q1 2026 Non-GAAP EPSRMB5.1243.6% above market consensus.
• Electronics and Appliances RevenueRMB132.2bnDown 8.4% year-over-year.
• General Merchandise RevenueRMB112.6bnUp 14.9% year-over-year.
• Marketplace and Advertising RevenueRMB26.5bnUp 18.8% year-over-year.
• Logistics and Other Services RevenueRMB44.4bnUp 21.7% year-over-year.
• New-Business LossRMB10.4bnBelow Q4’s RMB14.8bn, an important driver of group profit outperforming expectations.
• Q1 BuybackUS$630mnOngoing capital returns are seen as support for the share price.
• Target PriceUS$40 / HK$155Based on 9x FY+1 PE; prior target was US$36.

Impact & implications

The report’s investment implication for JD is constructive: despite uncertainties in industry consumption demand, JD shows earnings resilience through improved retail efficiency, narrowing New-Business losses, and a more disciplined AI spending path. If full-year profit guidance is met, low valuation and buybacks could continue to support the stock; however, if food-delivery-related capex cuts lead to slower general-merchandise growth, or if 2027 earnings normalization disappoints, market sentiment could still weaken.

Risks

• Weak Chinese macroeconomic and retail consumption conditions may weigh on e-commerce growth.
• The relationship between food-delivery investment and general merchandise growth remains uncertain; if spending cuts lead to slower growth, the market may re-rate earnings quality.
• Investors still question whether 2027 EPS can approach 2024 levels.
• Electronics and appliances are affected by a high base and subsidy shifts, with Q1 revenue down 8.4% year-over-year.
• Fulfillment costs, platform competition, anti-monopoly and other regulatory risks, and New-Business losses may drag on profitability.

What to watch

• Whether full-year profit guidance continues to be delivered.
• Whether general merchandise can sustain relatively strong growth after food-delivery spending is reduced.
• Whether New-Business losses continue to narrow, especially in food delivery and international business investment pace.
• Whether JD Retail margin and inventory turns continue to improve.
• Whether AI spending remains focused on supply-chain infrastructure rather than high-cost front-end large-model competition.
• Whether Q2 results and market noise lead to short-term sideways movement in the stock.