3Q26 Earnings Call Takeaways

Morgan Stanley maintains an Overweight rating on Hesai Group with a US$22 price target. The 3Q26 earnings call indicated that ASP and margins in the traditional LiDAR business are stabilizing as competition becomes rational. Management expects ATX ASP to stabilize into 2027 as room for further tech-driven cost reduction becomes limited, while contribution of premium ETX offsets lower-ASP FTX, keeping overall GPM resilient at around 40% in 2026 and 2027. Robotics LiDAR is a key revenue driver, with 3Q26 volume up 36% QoQ to 92K units, below expectations due to lower shipments to one lawnmower customer, with a 2026 target of about 500K units. Robotic actuators target over 100K units in 2027 versus 35K in 9M26, supported by continued expansion with Sharpa, more actuators per robot and potential new AI-company customers. SGI guidance is unchanged at US$100mn revenue, over 40% GPM and break-even in 2027. Management is confident the Kosmo 3D data engine can be margin-accretive above 40% GPM