Morgan Stanley raises Bilibili's target price to $31 and upgrades to "Overweight" rating

Morgan Stanley published a research report, upgrading the investment rating of Bilibili-W (BILI.US) from "In Line with Market" to "Overweight," with the target price raised from $25 to $31, mainly due to improved visibility in the game pipeline, continued positive impacts from artificial intelligence applications, and more attractive valuations following the recent stock price correction.

The firm expects Bilibili's gaming business to enter a new upward cycle in the second half of 2026, benefiting from the launch of three new games, with "Three Kingdoms: The Way of the King" (San Wang) contributing the most, expected to generate an annual revenue of RMB 1.7 billion, set to launch in the fourth quarter. The firm believes that the market's forecast of RMB 6.8 billion in gaming revenue for 2027 has not fully reflected the contributions of the new games, especially after the recent stock price correction.

The report indicates that Bilibili benefits from AI applications in several areas: 1) driving growth in daily active users and usage time through more effective identification and promotion of quality content; 2) improving creator efficiency and increasing content supply; 3) reducing costs through AI-assisted coding; 4) AI applications becoming a new emerging advertising client group for the platform. The firm raised Bilibili's mobile game revenue forecast for 2027 to 2028 by 17%, and the earnings per share forecast was raised by 2% to 3%