Hesai Group (HSAI): A Bull Case Theory

We came across a bullish thesis on Hesai Group on Danny’s Substack by Danny Green. In this article, we will summarize the bulls’ thesis on HSAI. Hesai Group's share was trading at $28.12 as of February 19th. HSAI’s trailing and forward P/E were 56.38 and 33.22 respectively according to Yahoo Finance.

Hesai Technology is a leading LiDAR hardware supplier primarily focused on sensors for automotive, robotics, and industrial applications. Its business is capital- and manufacturing-intensive, meaning scaling output—such as a potential 10× increase in units—requires proportional increases in materials, labor, tooling, and factory capacity. While vertical integration and in-house manufacturing may improve unit economics over time, hardware costs never approach the near-zero marginal cost seen in software, limiting dramatic operating leverage.

Hesai’s growth is strong, with the market entering broader adoption and shipments increasing rapidly, but it does not yet demonstrate multi-year exponential expansion. The company does not operate a reusable software platform; value is transactional, driven by OEM design wins rather than network effects or data flywheels. Each customer order is independent, and revenue growth depends on winning new design slots, though recurring production across multiple model years and established OEM relationships provide a predictable, repeatable revenue base.

Hesai has achieved non-GAAP profitability and positive cash flow, indicating improving operational efficiency, though high fixed and variable costs inherently limit leverage. Its revenue model does not fit traditional SaaS metrics like CAC/LTV, but large OEM contracts offer multi-year visibility. Expanding to 10× revenue by 2030 is feasible given LiDAR’s market growth from $859 million in 2024 to several billion dollars, supported by increasing adoption of automated safety systems and autonomous vehicles.

Geographic and industry expansion is underway, with deals like Mercedes and overseas factory plans, but hardware supply, logistics, and competition introduce uncertainty in seamless global replication. Overall, Hesai presents a compelling growth story within a capital-intensive hardware framework, with solid profitability, repeatable customer orders, and exposure to a rapidly expanding LiDAR market.

Previously, we covered a 

 on Innoviz Technologies Ltd. (NASDAQ:INVZ) by Danny Brody in January 2025, which highlighted the company’s LiDAR technology for autonomous vehicles, improving financial health, and operational efficiency despite post-SPAC volatility. INVZ’s stock price has depreciated by approximately 47.22% since our coverage. Danny Green shares a similar view but emphasizes Hesai Group’s scale in hardware production, multi-industry applicability, and repeatable OEM-driven revenue.

Hesai Group is not on our list of the 

. As per our database, 20 hedge fund portfolios held HSAI at the end of the third quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of HSAI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HSAI and that has 10,000% upside potential, check out our report about this