<p>In the global AI boom, which stock is the most undervalued? JP Morgan has provided a clear answer.</p>
<p>According to news from the Wind Trading Desk, a research report released by JP Morgan on August 12 stated, &#34;KUAISHOU is still the most undervalued AI stock.&#34; The bank significantly raised KUAISHOU Technology's target price from HKD 71 to HKD 88, representing an upside potential of 22%, and reiterated KUAISHOU as the preferred stock in China's digital entertainment sector. The report emphasized that KUAISHOU &#34;is not only about (AI large models) Keling,&#34; but its core advertising business growth is accelerating, and the boost from artificial intelligence to advertising is also underestimated.</p>
<h2>Keling's Business Outlook Significantly Upgraded</h2>
<p>JP Morgan has shown strong confidence in the growth prospects of KUAISHOU's AI video generation tool, Keling. The bank raised its revenue expectations for Keling in 2025 and 2026 from RMB 750 million and RMB 1.2 billion, respectively, by 61% to RMB 1.2 billion and RMB 1.9 billion.</p>
<p>This optimistic expectation is based on Keling's strong performance in the second quarter of 2025. Data shows that Keling's monthly revenue exceeded RMB 100 million in April and May. Regarding recent market concerns about Keling's cash flow fluctuations, JP Morgan believes this is an &#34;overreaction.&#34; The report states that high-frequency data only captures mobile revenue, while most of Keling's revenue comes from the PC side.</p>
<p>From a global competitive perspective, JP Morgan pointed out that AI video generation has a large potential market size, with the potential market size for advertising and professional content production exceeding USD 100 billion. As a &#34;global leader,&#34; Keling's prices are only 20-30% of those of overseas peers, indicating significant growth potential in overseas markets.</p>
<h2>Takeout Business Adopts Light Asset Model</h2>
<p>In response to market concerns about KUAISHOU entering the takeout industry, JP Morgan believes this is an overreaction. According to the bank's analysis, <strong>KUAISHOU launched a &#34;takeout&#34; entry on its app's local service interface in early August, but it adopts a light asset model centered on aggregation.</strong></p>
<p>Specifically, KUAISHOU mainly leverages partnerships with established companies like Meituan, rather than establishing self-operated logistics. KUAISHOU's takeout service acts as a traffic entry point, directing users to third-party platforms for fulfillment and delivery. JP Morgan believes this light asset business model can minimize upfront investment and may bring additional monetization opportunities for KUAISHOU by charging service commissions for traffic entry.</p>
<h2>Core Advertising Business Underestimated</h2>
<p>One of the core reasons JP Morgan reiterated KUAISHOU as the preferred stock in China's digital entertainment sector is that its advertising and e-commerce businesses have not been fully monetized. The bank predicts that KUAISHOU's growth rate in the coming years will exceed that of the overall advertising market, with a compound annual growth rate of 13% for advertising and e-commerce commission revenue from 2026 to 2027.</p>
<p>From a user base perspective, JP Morgan pointed out that KUAISHOU's user traffic remains stable and has not been affected by the rapid growth of WeChat's video accounts. At the same time, the revenue structure shifting towards higher-margin advertising/e-commerce businesses is expected to drive profit margins up, leading to a compound annual growth rate of 20% in profits from 2026 to 2027.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1968d30a-66e8-4adc-8ef9-5006433e602a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1968d30a-66e8-4adc-8ef9-5006433e602a.png"/></p>
<h2>Valuation Still Appealing</h2>
<p>Although KUAISHOU has rebounded 73% year-to-date (compared to a 24% increase in the Hang Seng Index), JP Morgan believes its valuation remains attractive. According to the bank's data, KUAISHOU's current stock price corresponds to only 14/11 times the expected price-to-earnings ratio for 2025/2026, while the forecasted compound annual growth rate for profits from 2026 to 2027 is 20%.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1b4311a2-f26a-49b5-b956-34a1f12b5439.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1b4311a2-f26a-49b5-b956-34a1f12b5439.png"/></p>
<p>JP Morgan has set a target price of HKD 88 for KUAISHOU by December 2026, based on a 14 times expected price-to-earnings ratio for 2026, reflecting an optimistic view on the accelerated growth of its core advertising business in the second half of 2025 and the strong momentum of its Kuaishou Live. The bank expects that the upcoming announcement of the second quarter 2024 results will serve as the next catalyst.</p>
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Meituan will announce its first quarter 2025 results after the Hong Kong stock market closes on May 26. According to analysts' expectations, Meituan's revenue in Q1 2025 is expected to increase by 17% year-on-year to 85.44 billion yuan; adjusted net profit is expected to increase by 30% year-on-year to 9.73 billion yuan; net earnings per share are expected to be 1.39 yuan, a year-on-year increase of 61%.

Recently, a total of 40 analysts have rated Meituan-W, of which 38 analysts have given a "buy" rating or above, with an average target price of HK$199.15.

<p>Meituan will announce its first quarter 2025 results after the Hong Kong stock market closes on May 26. According to analysts' expectations, Meituan's revenue in Q1 2025 is expected to increase by 17% year-on-year to 85.44 billion yuan; adjusted net profit is expected to increase by 30% year-on-year to 9.73 billion yuan; net earnings per share are expected to be 1.39 yuan, a year-on-year increase of 61%.<br><br>Recently, a total of 40 analysts have rated Meituan-W, of which 38 analysts have given a "buy" rating or above, with an average target price of HK$199.15.</p>

Meituan earnings , understand it at a glance!

01024

<p>"KUAISHOU is still the most undervalued AI stock." JP Morgan's research report significantly raised KUAISHOU's target price and reaffirmed it as the preferred stock in China's digital entertainment sector. The core logic is the rapid growth of KuaLing AI business and the undervaluation of its core advertising business. The bank raised its revenue expectations for KuaLing AI video generation business by 61%, with a projected compound annual growth rate of 13% for advertising and e-commerce commission revenue from 2026 to 2027</p>

- Morgan Stanley identifies Kuaishou as the most undervalued AI stock, raising its target price from 71 HKD to 88 HKD, indicating a 22% upside.  
- The report highlights Kuaishou's accelerating core advertising business and the underestimated impact of AI on advertising revenue.  
- Despite a 73% stock rebound this year, Kuaishou's valuation remains attractive, with a projected price-to-earnings ratio of 14 for 2026, reflecting optimism about its growth potential.

Who is the most undervalued AI stock? JP Morgan: KUAISHOU-W!