Bernstein flagged Nio‘s sharp reduction in research and development (R&D) spending as a risk to the Chinese EV maker’s long-term competitiveness, even as the company reported its first-ever quarterly profit and drew upgrades from rival brokerages.
Analyst Eunice Lee reiterated a Market Perform rating and $5.50 price target — the most cautious stance among the four Wall Street firms that published notes in reaction to the Q4 2025 earnings results.
As of press time, Nio‘s US-listed shares were trading 2.1% lower at $5.58.
Lee said the scale of the R&D pullback “warrants attention given peers rapid progress in ADAS development and the potential implications for long-term competitiveness.”
Nio‘s R&D spending fell to 2.0 billion yuan in the fourth quarter, down 44% year on year and 15% quarter on quarter.
Selling, general, and administrative (SG&A) expenses dropped 28% year on year to 3.5 billion yuan.
Together, total operating expenses declined by 3.0 billion yuan from the year-earlier period and 1.0 billion yuan sequentially.
Bernstein said the compression that was central to the company’s ability to swing from a 3.5 billion yuan net loss in the third quarter to a 283 million yuan net profit in the fourth.
‘Strong Q4’
Fourth-quarter revenue reached 34.7 billion yuan, up 76% year on year and 59% quarter on quarter, driven by 125,000 deliveries and a 5% year-on-year increase in average selling price to 253,000 yuan.
The ASP improvement reflected the growing weight of the third-generation ES8 SUV in the product mix, which accounted for 32% of volume compared with 5% in the third quarter at a starting price of 406,800 yuan.
Gross margin reached 17.5%, with vehicle margin expanding to 18.1% from 14.7% in the third quarter.
The analyst attributed the growth to the ES8’s higher margins, improved production scale, and cost reductions on facelifted models.
The company had guided for non-GAAP breakeven and issued a profit alert on February 5.
Nio ultimately outperformed at the high end of the alert range and delivered a GAAP profit as well.
Still, Lee’s concern centres on whether Nio can sustain its technological differentiation while spending materially less on R&D than it did a year ago.
The company’s peers — including XPeng, Li Auto, and Huawei-backed brands such as Seres — have been accelerating investment in autonomous driving systems, an area where Nio has historically positioned itself as an industry leader.
Macquarie Raises Target
Macquarie took a more positive view, raising its price target to $6.50 from $6.10 while maintaining an Outperform rating.
Analyst Eugene Hsiao said the fourth-quarter results showed meaningful progress on several fronts but cautioned that intensifying competition in the SUV segment could weigh on 2026 growth.
Nomura Upgrades to Buy
Nomura upgraded Nio to Buy from Neutral — its first bullish rating on the stock since June 2023 — while cutting its price target to $6.60 from $8.40.
Analyst Frank Fan said Nio is ‘finally entering into a healthy business cycle’ and now expects the company to reach non-GAAP operating profit breakeven in 2026. Nomura projects a 25% shipment CAGR from 2025 through 2028.
BofA Raises Target
Bank of America’s analyst Ming Hsun Lee raised his price target to $6.70 from $6.30 while maintaining a Neutral rating.
Lee described fourth-quarter revenue as ‘largely in line’ with expectations and noted the non-GAAP profit miss was partly driven by 529 million yuan in equity investment losses — a below-the-line item that weighed on the bottom line despite strong operating results.
