China-based Hesai Group (HSAI) is climbing 5% after the company announced a new deal with the giant China-based automaker, BYD (BYDDY), today.

Additionally, BOCI Research started coverage of HSAI with a Buy rating. HSAI develops and markets LiDAR products.

HSAI's Deal With BYD

Hesai disclosed today that it would provide BYD with LiDAR for over 10 of its upcoming vehicles. The automobiles are expected to be mass produced beginning this year, Hesai stated.

"In 2024, BYD sold over 4 million intelligent driving-equipped vehicles, surpassing all domestic competitors," Hesai reported.

BOCI Research's Initiation

According to BOCI, Hesai is a leader in the global LiDAR market, and the company is well-positioned to benefit a great deal from the proliferation of automobiles that offer Level 3 autonomy in China. The research firm expects Hesai to expand significantly this year and beyond while remaining profitable. It sees Hesai's ability to manufacture its own products as an advantage, and it is upbeat on the quality of the company's LiDAR.

BOCI Research placed a $23 price target on the shares, well above their current level of around $18.

The Recent Price Action of HSAI Stock

In the last month, the shares have jumped 20%, while they have gained 328% in the last three months.

While we acknowledge the potential of HSAI, 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 HSAI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: The author owns shares of BYDDY but has no plans to trade them in the next 48 hours. This article is originally published at Insider Monkey.