NetEase

NTES

Market cap $82.8B

Investors interested in stocks from the Internet - Software and Services sector have probably already heard of NetEase (NTES) and Tyler Technologies (TYL). But which of these two companies is the best option for those looking for undervalued stocks?

NetEase and peers gain appeal as U.S.-China trade easing and policy shifts lift confidence in Chinese tech into 2H26.

I track a curated universe of 50 high-quality dividend growth stocks to identify opportune entry points based on valuation and future return potential. Year-to-date through June, the investable universe returned 8.69%, trailing SPY (10.10%) and SCHD (17.50%), but several individual stocks outperformed significantly. Currently, 39 out of 50 stocks offer a forward return estimate of at least 10%, with 22 appearing potentially undervalued by my free cash flow model.

Investors interested in stocks from the Internet - Software and Services sector have probably already heard of NetEase (NTES) and Tyler Technologies (TYL). But which of these two stocks presents investors with the better value opportunity right now?

NetEase (NTES) is deeply undervalued, trading at 10x free cash flow and offering a 24% upside to a $150/share target. International expansion, evidenced by hits like Marvel Rivals and Where Winds Meet, is accelerating, with overseas revenue now at 10.1%. NTES boasts a 38% free cash flow margin, $25.3B cash, low leverage, and expanding gross margins, supporting dividends and reinvestment.

The global video games industry is entering a period of consolidation that is likely to favour the biggest publishers and developers, according to analysts at Bernstein, who argue that investors should look beyond slowing revenue growth and focus on rising barriers to entry. The broker estimates the gaming market will generate around $220 billion of revenue in 2026, up 0.7%, following growth of 4.8% last year.

NetEase (NTES) could produce exceptional returns because of its solid growth attributes.

NetEase (NTES) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

The fund formerly known as the VanEck Gaming ETF (NYSEARCA:BJK) has changed character in a way income holders need to understand.

NetEase (NTES) has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.