Key Takeaways:
Jefferies reiterated Alibaba Group as its top AI investment pick, forecasting cloud revenue growth of 45% that beats consensus estimates.
"Alibaba's cloud business has a structural advantage given its full-stack capabilities, and the Model-as-a-Service division is showing strong revenue and margins," Jefferies analysts said in a July 8 research report.
The broker forecasts Alibaba Cloud revenue growth of 45% year over year for the fiscal first quarter ended June 2026, above the market consensus of 41% and its own prior estimate of 40%. Cloud EBITA margin is expected to improve quarter over quarter to 11.5%. Total group revenue is seen at about RMB270 billion, up 9% year over year.
The bullish call positions Alibaba as a direct beneficiary of China's AI infrastructure buildout, with its cloud segment emerging as the primary growth engine. Shares surged 12.2% to HKD107.5 on the Hong Kong exchange, giving the company a market value of about HKD2 trillion.
Jefferies maintained its price targets at $185 for the US-listed shares and HKD179 for the Hong Kong stock, implying about 67% upside from the current level. The broker also projected AIDC net profit of RMB583 million, well above market expectations of RMB239 million and its own prior forecast of merely breaking even.
The 618 shopping festival, however, is not shaping up to be a standout event this year, Jefferies noted, though the trend is consistent across platforms and not unique to Alibaba. Customer management revenue is estimated to decline about 6.5% year over year, while combined EBITA for China e-commerce and AIDC is expected to remain flat.
The reaffirmation signals that Jefferies sees Alibaba's AI cloud momentum as durable despite near-term e-commerce headwinds. Investors will watch the fiscal first-quarter earnings report, expected in August, for actual cloud revenue and margin data. The stock remains one of the most heavily traded names on the Hong Kong exchange, with short selling accounting for 18% of turnover on July 8.
This article is for informational purposes only and does not constitute investment advice.
