NetEase refutes rumors of "AI layoffs of all outsourcing," with Ding Lei, worth 310 billion, proudly promoting AI.

Radar Finance Report | Peng Cheng Editor | Meng Shuai

Recently, a piece of news stating that “NetEase plans to use AI to lay off all outsourced employees” has drawn widespread attention, once again bringing this veteran internet giant into the public spotlight.

In response, NetEase clarified that the recent personnel changes are merely normal business adjustments and personnel replacements for certain projects, which are part of the company’s routine operational management and will not impact the normal operations of the company as a whole or its various business lines.

Although NetEase quickly came forward to refute the rumors, it cannot be overlooked that AI technology is sweeping across various industries with tremendous momentum, bringing unprecedented changes and opportunities, while also putting organizational change pressure on many gaming companies, including NetEase.

It is worth mentioning that in the “2026 Hurun Global Rich List” unveiled earlier this March, NetEase founder Ding Lei ranked fifth among China’s wealthiest with a fortune of 310 billion yuan.

However, the latest financial report data released by NetEase reveals the company’s short-term performance pressure. In the fourth quarter of last year, the company’s net profit attributable to shareholders plummeted by nearly 30% year-on-year. Following the release of the financial report, several international investment banks, including Goldman Sachs and UBS, successively lowered their target prices or profit forecasts.

Ding Lei stated that looking ahead, NetEase’s various business lines will continue to focus on creating high-quality products. By building an innovative talent ecosystem and deepening cooperation with global partners, the company aims to steadily advance AI application capabilities, thereby continuously enhancing the vitality of games, providing novel product experiences, and creating greater value for global players and shareholders.

Denying the rumor of “laying off all outsourced employees”: Normal personnel adjustments and optimizations

The trigger for this incident originated from widely circulated chat screenshots on social media.

According to reports from Red Star News, the relevant online chat records claimed that NetEase Interactive Entertainment, in order to achieve cost reduction and efficiency improvement, has successfully experimented with AI writing code, creating art, testing, and other functions, and plans to replace outsourced positions with AI, expecting to cut 30% to 40% in April and 80% or even all outsourced personnel in May.

This information spread rapidly online, sparking widespread discussion, and NetEase made clarifications to multiple media outlets on March 18.

NetEase clearly stated that this information is false, “Currently, due to project adjustments, there are indeed personnel replacements within the company, but this is a normal personnel adjustment and optimization.”

According to the 21st Century Business Herald, NetEase stated that the recent personnel changes are merely normal business adjustments and personnel replacements for certain projects, which are part of the company’s routine operational management and will not impact the normal operations of the company as a whole or its various business lines.

Additionally, Red Star News learned from relevant sources that there are indeed plans within NetEase to adjust some basic skill positions, but it does not involve using AI to replace all outsourced positions.

According to Tianyancha, NetEase was founded by Ding Lei in 1997 in Guangzhou and has been listed on the U.S. stock market in 2000 and on the Hong Kong stock market in 2020.

In 2001, NetEase officially established its online gaming division, with the Interactive Entertainment Business Group as the largest game division in terms of personnel, having developed flagship IPs and popular products such as the “Fantasy Westward Journey” series, “Big Talk Westward Journey” series, and “Onmyoji” series over the past 20 years.

Although NetEase has refuted the rumor of “using AI to lay off all outsourced employees,” the explosion of AI technology is reshaping the global wealth landscape, which is an undeniable fact.

In the “2026 Hurun Global Rich List” published recently by the Hurun Research Institute, 114 billionaires come from AI companies, with 46 being new entrants; AI is becoming the largest source of new billion-dollar entrepreneurs.

It is worth noting that as the founder and actual controller of NetEase, Ding Lei’s personal wealth has also long ranked among China’s top entrepreneurs, fluctuating with the company’s market value.

In this year’s “Hurun Global Rich List,” Ding Lei ranked fifth among China’s billionaires with a fortune of 310 billion yuan, following Zhang Yiming, Zhong Shanshan, Ma Huateng, and Zeng Yuqun, with his wealth increasing by 33% compared to the previous year.

Affected by operating expenses and investment losses, fourth-quarter performance faces short-term pressure

Despite Ding Lei’s substantial personal wealth, the latest financial report data disclosed by NetEase reveals the short-term performance pressure the company is facing.

According to the latest financial report released by NetEase, in the fourth quarter of last year, the company achieved revenue of 27.5 billion yuan, a year-on-year increase of about 3%.

On the profit side, although NetEase’s gross profit for the quarter increased by 8.7% year-on-year to 17.7 billion yuan, with the gross profit margin rising from 61% in the same period last year to around 64%, the net profit attributable to shareholders plummeted by 28.8% year-on-year to 6.242 billion yuan.

Among them, NetEase’s core business—games and related value-added services—earned revenue of 22 billion yuan in this quarter, a year-on-year increase of 3.4%, but lower than analysts’ expectations of 23.42 billion yuan.

Economic Observer pointed out that although long-term products such as “Fantasy Westward Journey” and “Identity V” showed stable performance, new games like “Yanyun Sixteen Sounds” and “Marvel Showdown” contributed to incremental growth, the market believes its monetization ability has not met optimistic expectations. Some institutions pointed out that the pace of new products in the first half of 2026 is slowing, exacerbating concerns about growth momentum.

In-depth analysis of the reasons for NetEase’s performance decline in the fourth quarter reveals that the rise in operating expenses directly eroded the profit margin.

In the fourth quarter, NetEase’s operating costs were 9.9 billion yuan, compared to 10.2 billion yuan and 10.5 billion yuan in the previous quarter and the same quarter of 2024, respectively, showing decreases both year-on-year and quarter-on-quarter.

The quarter-on-quarter decrease was mainly due to a decline in revenue sharing, while the year-on-year decrease was mainly due to a decline in the cost of licensed game copyrights and revenue sharing.

During the same period, NetEase’s operating expenses increased by 10.9% year-on-year to 9.4 billion yuan, compared to 8.5 billion yuan in the same period of 2024. This was primarily due to a significant increase in marketing expenditures in the online gaming sector. In the context of intense competition in the gaming industry, high customer acquisition costs seem to have become a common dilemma.

At the same time, in the fourth quarter of last year, NetEase confirmed that investment losses and exchange losses totaled about 2.2 billion yuan, while the same period last year recorded about 1 billion yuan in gains, which also dragged down the company’s net profit performance.

Looking at the entire year, NetEase achieved revenue of 112.6 billion yuan in 2025, a year-on-year increase of 6.96%; and a net profit attributable to shareholders of 33.76 billion yuan, a year-on-year increase of 13.68%.

In the financial report released this time, NetEase also mentioned AI multiple times. NetEase stated that after years of focus and investment, it has achieved comprehensive deepening of AI applications, deeply empowering the entire process of game development and gameplay innovation, widely covering all aspects from art, planning, programming, animation to quality assurance.

NetEase emphasized that these measures not only significantly enhance the company’s large-scale, scalable production capabilities but also ensure the smooth implementation of diverse AI-native gameplay in multiple flagship products.

Multiple institutions adjust target prices, AI may bring organizational change pressure

It is worth mentioning that recently multiple international investment banks have adjusted their profit forecasts and target prices for NetEase.

In a research report published before the release of this financial report, Goldman Sachs pointed out in early February that the recent pressure on NetEase’s stock price may stem from market concerns about the slowdown in recent game revenue growth, the profit margins facing high bases in the fourth quarter of 2025 and the first quarter of 2026, and the potential impact of the Genie 3/AI game creation tool.

Goldman Sachs slightly lowered its revenue forecast for NetEase from 2025 to 2027 by about 1% to reflect a pipeline tilted towards this year’s second half and next year; at the same time, it lowered its profit forecast for 2025 to 2027 by about 3% to reflect a slowdown in profit margin expansion under high bases.

However, Goldman Sachs reiterated its “buy” rating for NetEase, slightly lowering the target price for H-shares from 266 HKD to 264 HKD, and lowering the target price for U.S. stocks from 170 USD to 169 USD.

After the financial report was released, Morgan Stanley published a research report stating that NetEase’s revenue for the fourth quarter of 2025 only increased by 3% year-on-year to 27.5 billion yuan, among which online game revenue increased by 4% year-on-year to 21.3 billion yuan, which was 6% lower than the bank’s expectations due to slower revenue recognition.

The bank estimates that total game revenue grew by 10% year-on-year, which is a very healthy growth level. Meanwhile, deferred revenue grew by 34% year-on-year to 20.5 billion yuan, continuously reaching new highs. Non-GAAP net profit decreased by 27% year-on-year to 7.1 billion yuan, which was 25% lower than the bank’s expectations.

UBS published a research report indicating that NetEase’s fourth-quarter revenue and operating profit were 5% lower than market consensus, and adjusted net profit was 23% lower than consensus due to investment losses.

The firm believes that although surface performance is weak, it has been offset by three positive factors: strong growth of deferred revenue by 34%, progress in confirming a dual primary listing plan, and management’s constructive view on AI applications.

UBS slightly lowered NetEase’s target price for U.S. stocks from 185 USD to 180 USD and correspondingly lowered the target price for NetEase’s Hong Kong stocks to 280.8 HKD, equivalent to a projected price-to-earnings ratio of 21 times for 2026, maintaining a “buy” rating.

In addition to short-term performance pressure, the impact of AI technology on organizational structure has also drawn significant attention from the public. Although NetEase denied the rumors of “using AI to lay off all outsourced employees,” it stated that “there are indeed personnel replacements within the company due to project adjustments.”

Combining the potential impact of the “Genie 3/AI game creation tool” mentioned in Goldman Sachs’ report, and the current reality that AI has become the largest engine for wealth creation as revealed in the “2026 Hurun Global Rich List,” traditional gaming giants may be facing organizational change pressures brought about by technological iterations.

It is noteworthy that industry insiders pointed out that there are obvious logical flaws in this rumor. Although the development of AI technology in recent years has indeed improved the efficiency of some basic tasks to a certain extent, outsourced positions encompass multiple dimensions such as technical support, art outsourcing, operational review, and administrative logistics, many roles involving complex execution and human emotional logic still cannot be completely replaced by AI under current technological conditions.

The claim of “using AI to instantly take over and lay off all outsourced employees” not only exaggerates the current landing capabilities of AI but also contradicts the actual operational rules and common sense of large internet enterprises.

As the trend of AI technology development is unstoppable, what kind of answer will NetEase deliver in the future? Radar Finance will continue to pay attention.