By Jiahui Huang

Hesai Group's shares fell sharply in Hong Kong after the Chinese car-sensor maker reported a softer first-quarter margin.

The shares fell 9.3% to 158.00 Hong Kong dollars, equivalent to US$20.17, early Wednesday. Hesai's American depositary receipts closed 9.0% lower at US$20.2 on Tuesday.

The declines came after the company on Tuesday reported a narrower margin for the first quarter due to higher revenue contribution from products with relatively lower margins.

Hesai's first-quarter result was largely in line with market expectations, analysts said.

That said, Hesai's shipment volumes for both advanced autonomous driving assistance lidar and robotic lidar more than doubled during the period.

"It is encouraging to see Hesai formally announce its partnership with Mercedes-Benz across Europe and China, as well as secure new design wins for Xiaomi's overseas models," Bernstein analysts wrote in a note.

Hesai is the world's largest maker of vehicle lidar, the laser-based sensors widely used in autonomous driving.

The company is actively expanding its operations to the field of physical artificial intelligence, and targets segment revenue of around 100 million yuan, equivalent to US$14.7 million, this year.

The upside of moving into the business of building the "eyes" and "muscles" of physical AI has yet to be priced in, Bernstein said.

There could be new catalysts emerging in the second half from new initiatives, which may drive a rerating of Hesai's earnings and valuation away from those of conventional auto-parts makers, Citi analysts wrote in a note.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

May 19, 2026 23:16 ET (03:16 GMT)

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