Is NIO a good stock to buy? We came across a bullish thesis on NIO Inc. on LongYield’s Substack. In this article, we will summarize the bulls’ thesis on NIO. NIO Inc.’s share was trading at $5.60 as of May 29th.
NIO Inc. designs, develops, manufactures, and sells smart electric vehicles in China, Europe, and internationally. NIO has entered a decisive inflection phase following its Q1 2026 results, transitioning from a prolonged cash-burning growth story into a business demonstrating sustained operating leverage and a credible path to profitability. In Q1 2026, NIO delivered adjusted operating profit of RMB 66.8 million on revenue of RMB 25.5 billion, marking its second consecutive quarter of operating profitability and signaling a structural break from the RMB 6.75 billion loss recorded a year earlier.
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Deliveries surged 98.3% year-over-year to 83,465 units, supported by the NIO, ONVO, and Firefly brands, while vehicle gross margin expanded to a record 18.8%, reinforcing the durability of the company’s cost transformation. Revenue more than doubled year-over-year, with improving mix driven by higher ASP models such as the ET9, while overall gross margin reached 19.0%, the highest in four years, highlighting strong operating leverage as scale accelerates.
The investment case for NIO now rests on a clearer structural foundation: a three-brand strategy expanding addressable market coverage from premium to mass market, a differentiated battery swap ecosystem that creates recurring revenue and switching costs, and a rapidly maturing software and autonomous driving stack anchored in NT 2.0, NT 3.0, NAD, and Banyan OS.
Importantly, R&D intensity has compressed sharply from peak levels to approximately 7–8% of revenue, while SG&A leverage improves as shared infrastructure supports multiple brands. This combination is driving a meaningful inflection in profitability despite continued industry competition.
Management’s Q2 2026 guidance further reinforces momentum, targeting 110,000–115,000 deliveries and RMB 32.8–34.4 billion in revenue, implying 52.7%–81.2% year-over-year growth. The company also expects continued margin expansion and accelerating battery swap deployment, strengthening its ecosystem moat.
While risks remain from intense domestic EV competition and capital markets volatility, the trajectory has clearly shifted, and the bear case has weakened materially. Given the operational inflection and scale-driven leverage, NIO presents a high-upside setup, with the broader narrative increasingly centered on how quickly its three-brand flywheel compounds rather than survival, supporting a sharply re-rated long-term valuation scenario.
Previously, we covered a bullish thesis on NIO Inc. (NIO) by 1Darkhaos in February 2025, which highlighted its battery-swapping moat, three-brand expansion strategy, and mass-market optionality despite execution risks and cash burn. NIO’s stock price has appreciated by approximately 18.64% since our coverage. LongYield Research shares a similar view but emphasizes a sharper earnings inflection, operating profitability, and margin-driven structural turnaround supported by Q1 2026 results.
NIO Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held NIO at the end of the first quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of NIO 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 NIO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
