Goldman Sachs has released a research report stating that NetEase (09999) stands out as a high-quality "non-AI" conglomerate. Amidst elevated AI spending across the industry and margin pressure faced by some peers, the company's gross margin and free cash flow have both reached record highs. In the second quarter, gaming revenue grew 10% year-on-year, while operating profit surged 29% year-on-year, once again demonstrating the resilience of its gaming business and its capacity for earnings growth.

The investment bank has raised its target price for the company from HK$262 to HK$263, while reaffirming a "Buy" rating. Benefiting from a favorable mix of PC and mobile games, lower iOS/Android channel fees, and a strategic shift toward its own distribution channels, the gross margin for the gaming segment hit an all-time high in the second quarter. Goldman Sachs believes this margin expansion is structural in nature. Combined with ongoing operational efficiency improvements, the firm anticipates that operating profit growth can sustain a high double-digit year-on-year pace in the second half of the year. Additionally, net profit forecasts for the 2027-2028 period remain largely unchanged.