Hesai Group (HSAI) is back in focus after announcing a contract with a leading European automaker and expanding its Mercedes-Benz L3 lidar program to more than 1 million units across over 10 joint venture models in China.

Despite the contract win and the expanded Mercedes-Benz L3 program, Hesai Group’s share price return has been mixed. The 1-day gain of 6.59% contrasts with a 30-day share price return down 16.53% and a 1-year total shareholder return down 28.13%. However, the 3-year total shareholder return is up 39.11%, suggesting longer term holders have seen a different story from recent momentum.

If this lidar contract has you thinking about where else growth in automation could show up, it may be worth checking out 29 robotics and automation stocks as a starting list of ideas.

With revenue and net income both growing at around 26% to 27% annually, and Hesai Group trading about 7% below one intrinsic value estimate, the question is whether this recent contract strength signals a buying opportunity or if the market is already pricing in future growth.

Most Popular Narrative: 41.7% Undervalued

Hesai Group’s most followed valuation narrative pegs fair value at $27.07 versus a last close of $15.78, so the story centers on a sizeable upside gap that the market has not closed.

Hesai’s valuation is increasingly supported by tangible execution and forward visibility rather than expectations alone. Following strong 4Q25 results, management reiterated a confident outlook, underpinned by stable gross margins driven by scale efficiencies and ongoing technology-led cost reductions. This combination is critical; it signals that growth is not coming at the expense of profitability, but alongside improving unit economics.

Want the full picture on why this narrative sees Hesai Group as materially undervalued? The core thesis leans on rapid revenue expansion, rising profitability and a richer earnings profile than the current price implies.

Result: Fair Value of $27.07 (UNDERVALUED)

However, this depends on Hesai Group defending its lidar share and managing geopolitical or regulatory setbacks that could slow adoption or squeeze margins.

Another View: Hesai Group Through the P/E Lens

The first narrative on Hesai Group focuses on a fair value of $27.07, but the P/E ratio offers a more cautious perspective. At 35.5x earnings, the stock trades well above the US Auto Components industry on 21.7x and peer averages around 15.3x, while only slightly below a fair ratio of 37.9x.

This spread indicates that investors are already paying a premium for Hesai Group compared to both the sector and closer peers. The P/E still sits near what the fair ratio implies the market could move toward, so the key question is whether earnings progress will justify that premium or leave little cushion if sentiment cools.

Next Steps

With sentiment split between opportunity and caution for Hesai Group, now is a good time to check the data yourself and weigh both sides. To see a concise breakdown of the key upside drivers alongside the main concerns investors are flagging, review the 4 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.