Morgan Stanley Slashes iQIYI, Inc. (IQ) Forecasts, Is the Worst Still Ahead?

iQIYI, Inc. (NASDAQ:IQ) is among the best Chinese stocks to buy according to hedge funds. On April 22, Morgan Stanley cut the price target on iQIYI, Inc. (NASDAQ:IQ) from $2.10 to $1.50 and reiterated an Equalweight rating on the stock. The firm also lowered its revenue forecasts by 6%, 8%, and 10% for 2026, 2027, and 2028, respectively. Not only that, non-GAAP net profit estimates for the same period dropped 71%, 40%, and 37%. This was mainly due to operating de-leveraging.

According to Morgan Stanley, early signs of rebound in user acquisition, engagement, and the competitive environment will take at least six months to materialize. The firm sees upside to be driven by content enhancements and potential blockbusters, especially mid-form series and AI-generated content, in addition to offline expansion. Apart from these, a favorable regulatory landscape, including faster license feedback, could drive further upside.

What’s interesting is the company’s strategy that leverages AI to broaden supply, which the firm believes differentiates iQIYI, Inc. (NASDAQ:IQ). From production know-how and creator services to IP access and commercialization capabilities, the company enjoys a strong foundation, Morgan Stanley noted.

Jefferies sees the company’s total revenue matching the expectations, with divergent performance observed across segments. The firm trimmed the price target on iQIYI, Inc. (NASDAQ:IQ) to $1.82 from $2.22 and reiterated a Buy rating on April 22.

iQIYI, Inc. (NASDAQ:IQ) is a Beijing-based online entertainment video services provider. Founded in 2009, the company operates an internet video content platform, provides experience services, and offers membership and licensing services, among others.

While we acknowledge the risk and potential of IQ 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 IQ and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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