Bilibili's (BILI) steady growth in advertisement revenue has more than offset setbacks from the delay of new games, Morgan Stanley's research division said in a late Thursday note to clients.

Bilibili has drawn ad spending from sectors such as gaming, consumer electronics, and internet services, including AI firms, the Morgan Stanley's analysts noted. Meanwhile, AI is boosting the productivity of high-quality content creators, as well as improving the efficiency of Bilibili's advertisements, the analysts said.

The analysts increased their expected revenue for 2026-28 by 1% to 2% on higher advertisement revenue, but cut their earnings per share estimates by 2% to 5% on anticipated AI-related research and development expenses.

Morgan Stanley's analysts kept the 'equal-weight' rating on the company's stock but cut its price target to $25 from $26.

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