HSBC has upgraded its rating on NIO to Buy from Hold and increased the bank's price target on the electric-vehicle maker to $6.80 from $4.80. In a note released on Friday, Yuqian Ding, HSBC's head of China autos research, said the bank sees "better visibility and stronger conviction on 2026e volume growth and earnings improvement trajectory."
The upgrade was issued after NIO recorded its first-ever quarterly net profit in the fourth quarter of 2025, reporting earnings of RMB0.12 billion. HSBC highlighted the company's recent operational performance as key support for the change in stance.
HSBC's analysis pointed to several specific drivers behind the upgrade:
- Strong volume trends - Vehicle volumes rose 43% quarter-on-quarter and 71% year-on-year in the quarter highlighted by HSBC, materially outpacing the broader electric-vehicle market, according to the bank.
- Improving unit economics - Vehicle gross margin expanded to 18.1%, with HSBC noting that stronger ES8 deliveries helped lift the margin.
- Cost discipline - Selling, general and administrative costs and research and development spending each declined 15% quarter-on-quarter, supporting profitability.
On near-term earnings visibility, HSBC expects "above-industry visibility for earnings in 1Q26," a view the bank says is supported by continued mix benefits and reduced disruption from subsidies.
Order and delivery momentum also featured in the note. HSBC reported that NIO delivered 48,000 vehicles in January and February combined, a 77% increase from the same two months a year earlier, and described order momentum as remaining strong.
Looking ahead, HSBC pointed to NIO's next product cycle as a potential catalyst for further growth. The bank cited upcoming models including the ES9, the ONVO L80 and a new large SUV slated for the third quarter as elements that should help "further lift volumes and sustain an improved product mix." Based on these expectations, HSBC now sees roughly a 20% increase in NIO's average selling price in 2026.
Alongside the coverage note, HSBC raised its price target to $6.80 per share from $4.80, reflecting the bank's updated view on the company's volume trajectory and earnings path into 2026.
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