NetEase Inc (HKG: 09999) saw its shares surge nearly 4% during late trading on Thursday, climbing 3.62% to HK$200.40 with turnover reaching HK$2.22 billion. The rally comes as investors responded positively to the company's second-quarter earnings release, which revealed stronger-than-expected top-line growth and record profitability in its core gaming segment.

According to CICC's analysis, NetEase's second-quarter revenue grew 8% year-over-year to RMB 30.1 billion, slightly exceeding both the brokerage's and market consensus forecasts. This outperformance was primarily driven by robust contributions from the gaming and value-added services (VAS) divisions. The investment bank also noted that gross profit and operating profit both surpassed expectations, attributing the beat to continued margin improvement and enhanced operational efficiency across the business.

Goldman Sachs echoed a bullish stance in its research note, highlighting that NetEase's gaming gross margin reached an all-time high in the second quarter. The Wall Street firm attributed this milestone to a favorable mix between PC and mobile gaming titles, reduced iOS/Android channel fees, and the company's strategic shift toward its proprietary distribution channels. Goldman believes this margin expansion is structural in nature, and when combined with ongoing operational efficiency gains, expects operating profit to maintain high single-digit year-over-year growth in the second half of the year.