JPMorgan: Bilibili — Buy the Dip for Steady Earnings Compounding; Upgrade to Overweight
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JPMorgan upgraded Bilibili (BILI US and 9626 HK) from Neutral to Overweight, establishing new December 2026 target prices of $35.00 and HK$270.00, implying 27% and 30% upside respectively. Following a 26% pullback from January 2026 highs due to AI investment concerns and sector volatility, JPMorgan views the current valuation as a compelling entry point.
The upgrade is anchored by AI-driven engagement and monetization. Fourth-quarter results showed DAU, total time spent, and advertising revenue growing 10%, 19%, and 27% year-on-year respectively. Bilibili plans to reinvest approximately RMB 600 million into AI during 2026 to enhance video recommendation, coding efficiency, and content production, which should sustain advertising growth above 25% in upcoming quarters.
While gaming faces first-half pressure from high bases, the second half should recover with key new launches. Management expects adjusted net profit to grow 25% in 2026 and 41% in 2027, driven by expanding operating margins. The recent reduction in iOS commission rates in China provides an additional roughly 3% profit tailwind across gaming, value-added services, and advertising.
Trading at 25 times 2026 estimated earnings and 18 times 2027 estimates, Bilibili offers a highly attractive 0.7 times PEG ratio against a 36% earnings CAGR for 2027-2028, with JPMorgan's profit forecasts exceeding consensus.