TLDR
- Jefferies reduced Alibaba’s price target from $231 to $225 while maintaining its Buy rating. It named Alibaba its top pick for 2026 based on AI and cloud opportunities.
- Morgan Stanley also lowered its target from $200 to $180, citing weakness in Alibaba’s core e-commerce business due to poor consumer spending in China.
- Alibaba’s cloud business continues to demonstrate strength, with a 34% year-over-year growth, driven by strong demand for AI services.
- The stock dropped 2.5% in premarket trading on Friday, despite gaining 5.3% the previous day and surging 78% over the past year.
- China is reportedly preparing to permit the sale of Nvidia’s H200 processor, which could benefit Alibaba as a major buyer of Nvidia equipment.
Jefferies adjusted its price target on Alibaba down to $225 from $231 while keeping a Buy rating on the shares. The firm still sees 53% upside from the current price of $146.75.
Despite the reduction, Jefferies named Alibaba its top pick for 2026. The firm pointed to opportunities in AI and cloud computing, along with Alibaba’s one-stop shopping platform.
took a more cautious stance. The bank lowered its target to $180 from $200, though it maintained a Buy rating.
The difference lies in e-commerce. Morgan Stanley warned that Alibaba’s core online shopping business has begun to decline.
Weak consumer spending in China is harming this segment. Analysts said the pressure could persist through the first half of fiscal 2027 due to tough year-over-year comparisons.
The bank anticipates Alibaba’s overall profitability to weaken in the near to medium term. This contrasts with the strength from other parts of the business.
Cloud Business Powers Forward
Alibaba’s cloud division had a 34% year-over-year growth in the latest quarter. Jefferies said the acceleration continues, driven by strong demand for AI services.
The firm expects Alibaba made substantial progress in Quick Commerce across different metrics during the December quarter. Revenue growth reached 5.21% for the period.
Alibaba reported quarterly results that exceeded expectations last quarter. The cloud segment contributed significantly to the outperformance.
The company’s core China e-commerce business did exceed revenue forecasts for the fiscal second quarter. But Morgan Stanley sees deterioration starting now.
Investment in AI Continues
Jefferies anticipates continued spending in Alibaba’s “All Others” segment. This includes various artificial intelligence initiatives the company is undertaking.
The firm acknowledged a base effect from last year. It also noted recent industry trends affecting expectations for Customer Management Revenue.
Benchmark maintained a Buy rating on the stock. The firm emphasized strong performance in the cloud segment and Customer Management Revenue, which grew 10% year-over-year.
Bernstein cut its price target to $190 from $200 but kept an Outperform rating. The firm acknowledged Alibaba’s focus on AI initiatives.
The stock declined 2.5% in premarket trading on Friday after gaining 5.3% on Thursday. Shares rallied 78% over the past year as Chinese tech stocks gained momentum.
China is reportedly preparing to allow the sale of Nvidia’s H200 processor in the country. Alibaba, a leading cloud computing provider, is a major buyer of Nvidia equipment.
