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Walt Disney (DIS) Bids For Character.AI, Is The Stock Still A Bargain?

Simply Wall St · 3d ago

Walt Disney (DIS) has drawn fresh attention after bidding US$20 million for a non exclusive, perpetual license to Character.AI's technology, paired with plans to hire most of the AI firm's workforce.

Disney’s bid for Character.AI came during a period of solid performance, with a 90-day share price return of 11.64% and a 30-day gain of 4.00%, indicating building momentum despite a 1-day decline of 1.88% to US$110.40.

Scan how Walt Disney’s AI pivot compares to peers by checking which media and tech stocks are already on our hand picked 38 AI small caps list.

Bulls see Walt Disney using Character.AI to squeeze more value from its US$194.3b IP empire. Bears see fresh execution risk and hype in the share price. Which side do the current valuation markers back up?

Most Popular Narrative: 13% Undervalued

Walt Disney closed at $110.40, while the most followed narrative pegs fair value closer to $126.61. This frames the Character.AI move against an already supportive earnings and Experiences thesis.

The global expansion of Disney's cruise and theme park businesses, with major investments in new ships and park attractions, including recent capacity additions that management says still do not satisfy current demand, is expected to support Experiences revenue growth and contribute to higher earnings over time.

See why 390 investors see Walt Disney as 13% undervalued.

Result: Fair Value of $126.61 (UNDERVALUED)

Still, if streaming ad demand stays weak or consumer softness at the Shanghai and Hong Kong parks persists, the bullish Walt Disney narrative could lose momentum.

Find out about the key risks to this Walt Disney narrative.

Another View: What Multiples Say About Walt Disney

There is a catch. On P/E, Walt Disney trades at 22.2x, which is richer than the US Entertainment industry at 20.9x, even though it screens cheaper than its own fair ratio of 25.3x and well below a peer average of 54.9x. Is that a reasonable premium or thin margin for error?

For investors weighing this against the Character.AI story and earnings narrative, the valuation gap on P/E raises practical questions about upside versus disappointment risk. Our breakdown tackles this in more detail, including how that fair ratio could pull the market closer to or further from today’s level, See what the numbers say about this price — find out in our valuation breakdown.

NYSE:DIS P/E Ratio as at Oct 2026
NYSE:DIS P/E Ratio as at Oct 2026

Next Steps

Plenty of investors see the Walt Disney story as skewed to the upside, while others focus on the downside signals and recent concerns. If you want to move quickly and build your own view from the ground up, start with the balance of risks and rewards set out in our 2 key rewards and 1 important warning sign.

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