Shares of Hesai Group, the Chinese lidar technology leader, jumped sharply Tuesday, climbing $1.68, or 10.69%, to $17.45, as investors continued to reward the company for a freshly approved stock split, a fresh bullish analyst initiation and growing momentum tied to its strategic partnership with Mercedes-Benz.

The latest gain builds on a rally that has gathered steam since Hesai’s annual general meeting on June 26, when shareholders approved an eight-for-one stock split and authorized the company to issue up to 10% more shares. The split, which improves the stock’s liquidity and is expected to broaden its potential investor base by lowering the per-share price, has been a primary driver of buying interest in recent sessions, even as the additional share issuance authorization carries some longer-term dilution risk that analysts have flagged as worth monitoring.

Adding further fuel to the rally, a new analyst initiated coverage on the stock with an Outperform rating and a $23.50 price target, joining what has already been an overwhelmingly bullish chorus of Wall Street voices. According to data compiled across 22 analysts tracking the company, the consensus rating on Hesai stands at “Strong Buy,” with a 12-month price target of $30.17, implying substantial additional upside from current trading levels.

Much of that optimism traces back to Hesai’s first-quarter 2026 results, released May 19, which showed the company continuing to scale rapidly across both its core automotive lidar business and a broader push into what management has termed “spatial intelligence.” Hesai reported net revenues of RMB680.6 million, or approximately $98.7 million, a 29.6% increase from the same period in 2025. Total lidar shipments reached 471,723 units, up 140.9% year-over-year, with shipments of lidar units for advanced driver-assistance systems surging 141.9% to 353,441 units. The company posted GAAP net income of RMB18.3 million and non-GAAP diluted earnings per share of ¥0.31, beating Wall Street expectations by more than 70%, marking another step in Hesai’s transition from a high-growth but unprofitable hardware company to one demonstrating sustained profitability.

That shift toward consistent profitability has become a central pillar of the bull case for the stock. According to the company’s own investor materials, Hesai achieved an industry-first full-year GAAP net income of $62 million and non-GAAP net income of $79 million for 2025, while delivering GAAP net income for three consecutive quarters and non-GAAP net income for five consecutive quarters. Hesai has also positioned itself as the global lidar market leader, ranking No. 1 in 2025 with more than 40% share of the long-range automotive lidar market, according to industry research firm Gasgoo, alongside top rankings in several major robotics lidar submarkets, including humanoids, quadrupeds, robotaxis, robovans and robotic lawn mowers.

The Mercedes-Benz partnership, announced alongside the first-quarter results, has been particularly significant to investor sentiment given the strategic validation it provides from one of the world’s most prominent automakers. Under the agreement, Hesai will supply lidar sensors to support Mercedes-Benz’s development of Level 3 autonomous driving capabilities, a milestone that analysts have characterized as evidence that major global automakers tend to stick with trusted lidar suppliers across multiple vehicle development cycles, offering Hesai a durable, long-term growth runway rather than a one-off contract win.

Alongside the Mercedes deal, Hesai introduced several new products during its first-quarter update, including the Picasso 6D SPAD-SoC lidar chip and the Kosmo SGI spatial intelligence device, part of a broader strategic shift the company has articulated toward what it calls “Physical AI,” a category encompassing not just automotive driver-assistance systems but also autonomous mobility, embodied AI, and industrial, agricultural and service robotics. Hesai has described itself as committed to becoming a key enabler of this broader AI-driven shift, leveraging its proprietary application-specific integrated circuit, or ASIC, technology and an integrated research, testing and manufacturing approach to maintain its competitive position across these expanding end markets.

To support that growth, Hesai has announced plans to more than double its production capacity in 2026, targeting more than 4 million units annually to meet what the company describes as surging global demand. New manufacturing facilities, including operations in Thailand, are intended to support international expansion while also helping mitigate geopolitical risks tied to the company’s Chinese manufacturing base, a consideration that has taken on added significance given ongoing U.S.-China trade tensions and periodic scrutiny of Chinese technology companies by U.S. regulators.

For the second quarter of 2026, Hesai has guided net revenues to a range of RMB850 million to RMB900 million, or roughly $123 million to $130 million, representing year-over-year growth of approximately 20% to 27%. That guidance, combined with the company’s expanding shipment volumes and new product pipeline, has formed the basis for analysts’ continued bullish positioning on the stock even as some have trimmed fair value estimates modestly in recent weeks to reflect slightly more conservative assumptions around longer-term growth and margin trends.

Not every signal surrounding the stock has been uniformly positive. Hesai shares have remained volatile over the past several months, including a roughly 19% decline over a 90-day stretch earlier this year before the recent rebound, reflecting the broader swings common among growth-oriented Chinese technology stocks navigating both company-specific execution risk and macro-level geopolitical uncertainty. Some analysts have also continued to flag the company’s reliance on continued strong shipment growth translating into durable order visibility and margin stability, particularly as competition intensifies in the increasingly crowded global lidar and advanced driver-assistance hardware market, including from domestic Chinese rival RoboSense Technology.

For now, Tuesday’s rally reflects a market clearly favoring the combination of improved share liquidity from the stock split, fresh institutional validation through the new analyst initiation, and continued confidence in Hesai’s expanding footprint across automotive, robotics and broader physical AI applications. Investors are likely to watch closely for further updates on how the Mercedes-Benz partnership and the company’s second-quarter revenue guidance translate into concrete order visibility and sustained profitability when Hesai next reports results, expected around August.