Alibaba Group Holding Ltd. (NYSE:BABA) stock climbed on Monday as strong performance in its cloud business and advances in artificial intelligence models offset investor concerns over escalating U.S.-China tensions.
Analysts from Goldman Sachs, Daiwa Securities, and China International Capital Corporation (CICC) highlighted Alibaba Cloud’s growth and early profit recovery on Taobao and Tmall as key drivers behind the rebound.
Goldman Sachs noted that Alibaba’s recent stock outperformance has reshaped the investment narrative.
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They raised Alibaba’s capital expenditure forecast for fiscal 2026–2028 to 460 billion Chinese yuan, among the highest in the market, and increased cloud revenue growth projections to 31%, 38%, and 37% year-over-year over the next three fiscal years, citing breakthroughs in multimodal AI models and a more diversified chip supply.
The firm also lifted its price forecast for Alibaba from $179 to $205, reflecting stronger visibility in e-commerce profitability and international cloud expansion.
Goldman Sachs maintains a Buy rating, viewing recent stock weakness as an attractive entry point.
Analysts highlighted early signs of profit recovery on Taobao-Tmall, Alibaba Cloud’s full-stack AI capabilities, and its local services platform as key drivers supporting Alibaba’s leadership in AI-powered daily consumption and hyperscale cloud operations.
They also raised Alibaba Cloud’s fiscal 2026–2028 revenue growth forecasts to 33%, 29%, and 19%, and increased its valuation to $54 per share from $43.
Daiwa Securities analysts said Alibaba could report a relatively high EBITA loss of up to 35 billion Chinese yuan in the third quarter of fiscal 2026. Still, they expect the loss to peak and decline thereafter.
They forecast that marketing cost reductions, supply-side expansion, and optimized delivery expenses could cut the group’s EBITA loss to 17 billion Chinese yuan within a few months.
Daiwa projects Alibaba Cloud’s revenue to grow 30% year-over-year in the second-quarter fiscal 2026. The analysts noted potential quarterly acceleration, while the International Digital Commerce Group’s revenue growth may slow to 16% in the same period.
Analysts expect Alibaba Cloud’s EBITA margin to stay in the high single digits from the second quarter to the fourth quarter of fiscal 2026, supported by the absence of intense price wars. Despite lowering its EPS forecasts by 2–15% for fiscal 2026–2028, Daiwa reaffirmed its Buy rating.
CICC analysts projected that Alibaba’s second-quarter fiscal 2026 revenue will rise 3.8% year-over-year to 245.5 billion Chinese yuan, while adjusted EBITA is expected to fall 83% to 7.1 billion Chinese yuan, missing consensus estimates.
They attribute the decline to higher investments in flash purchase services and widening losses in other business segments.
CICC expects Alibaba Cloud revenue to grow 30% year-over-year in the same quarter, up from 26% in the first quarter, with an EBITA margin of 9%.
The firm noted that Alibaba unveiled new AI models, applications, and hardware at its Apsara Conference, and believes the cloud unit’s supply-side advantages will drive sustained revenue and profit growth, boosting valuation.
The analysts forecast an EBITA loss of 36.5 billion Chinese yuan for Alibaba’s flash purchase services, exceeding expectations.
CICC anticipates that the monthly unit economics (UE) could narrow to around 3 Chinese yuan, supported by a higher average order value, better monetization rates, and optimized fulfillment costs.
CICC projects that Alibaba’s customer management revenue will increase 10% year-over-year, driven by higher monetization and a 2–3% contribution from flash purchase services, while gross merchandise volume is expected to rise by 5.7%. Excluding flash purchase losses, e-commerce EBITA is likely to post positive year-over-year growth.
The firm expects Alibaba’s International Digital Commerce Group to report essentially flat adjusted EBITA, as the company maintains a profit-first approach amid uncertainty.
CICC lowered its fiscal 2026 revenue forecast by 1% to 1.06 trillion Chinese yuan while keeping the 2027 forecast mostly unchanged, and revised adjusted net profit downward by 17% for 2026 and 4% for 2027 to 101.2 billion Chinese yuan and 143.8 billion Chinese yuan, respectively, reflecting expanded losses in flash purchase services and other businesses.
Applying a Sum-of-the-Parts valuation, CICC maintained an Outperform rating with a price forecast of $204.
Price Action: BABA stock was trading higher by 4.14% to $165.59 premarket at last check Monday.
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