JPMorgan estimates T-Head’s potential valuation at $25–62 billion but emphasizes this is only a rough comparative calculation. Analysts believe that, in the absence of key information such as financial data and external customers, the market should currently focus on the actual monetization capabilities of Alibaba Cloud and its AI business, rather than narratives of "value unlocking."
Media reports suggest Alibaba is preparing to spin off its chip unit T-Head for a separate listing, a move that JPMorgan finds surprising in terms of the "timing of the reports."
According to market sources, on January 23, a team led by Yao Cheng, Head of China Equity Research at JPMorgan, published a report estimating T-Head’s potential valuation in the range of $25 billion to $62 billion, based on peer comparisons. This would account for approximately 6% to 14% of Alibaba’s current market capitalization.
However, the report clearly states that this figure is highly dependent on future actual business scale, competitiveness, and the final transaction structure.
Analysts believe the market is currently more focused on verifying whether Alibaba Cloud and its core AI business can deliver tangible results. The company’s decision to revive the "value unlocking" narrative appears more as a strategic communication gesture, attempting to showcase the value of its assets.
How the $25–62 billion estimate was calculated
Regarding T-Head’s potential valuation, JPMorgan provided a wide range: $25 billion to $62 billion, accounting for about 6% to 14% of Alibaba’s current market cap.
The report emphasizes that this is an indicative "option value" estimate, derived by comparing aggressive 2026 revenue proxy figures with rough benchmarks against domestic peers such as Kunlunxin and Cambricon.
This valuation range is highly sensitive to three factors: which assets are actually sold externally, T-Head’s competitiveness compared to domestic and international alternatives, and the final transaction structure.
In other words, the number more closely answers the question, "How much would the market value T-Head if it were a standalone asset?" rather than being based on a full fundamental model of the chip business.
The research report candidly admits that, due to limited disclosures, they "intentionally simplified the framework."
Surprised by the "timing of reports"
JPMorgan expressed surprise that Alibaba chose this moment to send the market a signal about "value unlocking."
The report notes that the market’s core narrative and attention are currently closely tracking whether the monetization of Alibaba’s core "Cloud + Generative AI" business can reach an inflection point. Investors are most concerned about whether Alibaba Cloud’s revenue can accelerate growth in the coming quarters.
In contrast, T-Head remains a business whose revenue primarily comes from within Alibaba, with an uncertain external commercialization path. The report highlights the need to monitor several important data points:
Formal restructuring steps; Financial data or segment economics for T-Head Semiconductor; More data on external mass production adoption; And signals regarding the proposed listing venue and timeline.
In the absence of such signals, JPMorgan expects initial excitement to fade.
Short-term sentiment, long-term strategy
JPMorgan judges that even if news of T-Head serves as a short-term sentiment catalyst, the resulting market excitement may be difficult to sustain, with focus ultimately returning to Alibaba’s fundamentals.
Analysts remain optimistic about Alibaba’s trading prospects over the next 6–12 months, believing the company can navigate short-term profit pressures and expecting Alibaba Cloud revenue to accelerate in future quarters.
The report indicates that the upside potential from AI-driven cloud business, along with the strategic optionality of the entire platform, will outweigh the profit pressures from short-term investments in areas like local services and user acquisition. Simply put, they believe the Alibaba Cloud story deserves more attention than immediate cost concerns.
In summary, JPMorgan believes investors should focus their attention on the integration progress of Alibaba’s core cloud and AI businesses, along with tangible evidence of revenue growth.
As for T-Head’s capital market narrative, until it truly gains independence and approaches a listing, it should be viewed as an ambiguous "additional option."
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