What JOYY Doubters Missed

If you only skimmed the headlines about JOYY’s falling net margin and pressure on profits, this outcome might feel counterintuitive. Investors who held JOYY over the past year are up 48.4%, including dividends. If you had been weighing those sharply different analyst targets in November 2025, with bulls focused on AI driven expansion and bears worried about regulation and competition, what should have stood out strongly enough to justify taking the risk?

This theme extends beyond JOYY. See which of 41 AI small caps may still merit a closer look.

The Two JOYY Narratives Investors Had To Weigh

The shares cost US$58.82 at the start of the period, and anyone looking at JOYY then had to judge which story about its future felt more realistic.

On the optimistic side, the bullish case saw Fair Value at US$71.9, a price implied by assumptions of 6.1% annual revenue growth and a future P/E of 40.0x. That view leaned on AI driven personalization, real time translation, and layered monetization to support a 3.9% profit margin.

The bearish narrative pointed to a Fair Value of US$37.18 based on 3.6% yearly revenue growth and a future P/E of 36.5x. It leaned on concerns about tighter data privacy rules, higher compliance costs, and rising competition compressing profit margins toward 2.4%.

What The Results Changed For The JOYY Thesis

JOYY’s Q2 2026 report showed total revenue at US$590.8 million versus US$507.76 million in Q2 2025, which backed the bulls’ focus on AI supported advertising and newer commerce lines. Profit told a different story. Net income excluding extra items slipped from US$60.48 million to US$51.45 million, and net margin fell from 11.9% to 8.7%. The evidence cut both ways.

The key assumption on trial was that AI driven expansion would support healthier profitability, not just a bigger top line. When you assess another growth story, track whether revenue, absolute earnings, and net margin all move in the same direction across several reports rather than relying on sales alone.

What JOYY’s Repricing Is Asking You To Believe Now

JOYY changes hands today at US$81.21. The selected Narrative places its Fair Value above that mark, framing the recent repricing as only a partial reflection of its ad driven and AI centric ambitions.

The argument leans on JOYY’s AI tools, ad tech and capital returns working together to support richer monetization. The key question is whether sustained gains in user engagement and ad yield can keep powering that story.

"Management is focusing on high-quality operations and disciplined cost control, leading to a significant improvement in non-GAAP operating income (+27.9% YoY) and net margins, with gross margin improvements driven by higher-margin non-livestreaming revenues and steady cost discipline, which could support long-term earnings growth."

One Narrative disagrees with today's price. → See where this Narrative says JOYY should trade

Which Company Could Surprise You Next?

The story behind this run has already been told. The next one could be taking shape somewhere else. Where could you start looking before it becomes the headline?

• Company 1 - 31% below our estimate - uses government-backed trade-in subsidies to route more used devices into recommerce programs.
• Company 2 - 42% below our estimate - expands merchant payment volumes while automating higher margin services to counter take rate pressure.
• Company 3 - 37% below our estimate - applies AI tools and tighter carrier vetting to improve productivity and cut fraud-related claims costs.

Those are three of them. See all 35 potentially undervalued companies →

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