US Stock Market Move | NTES (NTES.US) rose 7%, with second-quarter gaming revenue exceeding expectations.

On Friday, NTES (NTES.US) rose 7%, closing at $128.29. On the news front, on August 20, NTES announced that its total net revenue for the second quarter reached 30.11 billion yuan, with game revenue at 25.02 billion yuan, both exceeding market expectations; gross profit stood at 21.22 billion yuan, a year-on-year increase of 17.5%. Online game revenue grew by 10% year-on-year to 24.5 billion yuan, while the groups gross margin increased from 64.7% to 70.5%, driven mainly by a reduction in channel sharing costs. Goldman Sachs Group, Inc. released a report stating that NTES is a high-quality "non-AI" composite enterprise. Amid high AI spending in the industry and pressure on gross margins from some peers, the company's gross margin and free cash flow reached record highs, further demonstrating the resilience and profit growth capability of its gaming business. Additionally, benefiting from a favorable mix of PC and mobile games, a decrease in iOS/Android channel fees, and a shift toward its own channels, the gross margin for games in the second quarter hit an all-time high. Goldman Sachs Group, Inc. believes that the gross margin expansion is structural and, in conjunction with operational efficiency optimization, expects profit growth in the second half of the year to maintain a high double-digit year-on-year increase.