JPMorgan Chase & Co. reiterated its "Overweight" rating on Bilibili Inc. (BILI.US), forecasting the company’s operating profit will increase by 23 percent in 2026 as investments in artificial intelligence and advertising growth begin to pay off.
"The current valuation is attractive and investors are advised to accumulate the stock," JPMorgan analysts said in a note, maintaining a price target of HKD270 on the Hong Kong-listed shares and USD35 on the U.S.-listed securities. The bank believes market concerns over potential stake reductions by major shareholders are "excessive."
The bank projects Bilibili’s advertising revenue to grow by as much as 27 percent in 2026, helping to accelerate overall operating profit growth to 48 percent by 2027. While JPMorgan lowered its 2026 gaming revenue forecast by six percent, it raised its 2027 forecast by four percent, signaling confidence in the company's longer-term gaming pipeline.
JPMorgan's bullish outlook contrasts with the stock's recent performance. Bilibili's U.S. shares have fallen 22.6 percent over the past month and 34.7 percent year-to-date, closing at US$17.23 recently. The firm's price target of USD35 implies a significant upside from the current price.
Contrasting Valuation Views
JPMorgan's positive stance is based on future profitability, but other metrics present a mixed picture. The stock currently trades at a price-to-earnings (P/E) ratio of 34.5x, significantly higher than the interactive media industry average of 12.3x. This suggests a premium valuation based on current earnings.
However, a discounted cash flow (DCF) analysis from Simply Wall St suggests an intrinsic value of US$31.70 per share, indicating the stock could be undervalued by over 45 percent based on future cash flow projections. This aligns more closely with JPMorgan's view that the company's long-term growth is not yet reflected in its price.
AI Investment as a Key Driver
A core part of JPMorgan's thesis is Bilibili's investment in artificial intelligence. The bank believes this spending offers a high rate of return by partially replacing user acquisition costs and improving the company's overall expense structure. The net impact on profit in 2026 from this investment is expected to be less than RMB500 million, according to the report.
The positive analyst rating may help counter recent negative sentiment that has weighed on the stock. For investors, the report shifts the focus toward Bilibili's 2026 and 2027 growth trajectory, driven by advertising and a recovery in its gaming division. The next key catalyst will be the company's upcoming earnings report, where investors will look for confirmation of the margin improvements and advertising strength projected by JPMorgan.
This article is for informational purposes only and does not constitute investment advice.
