Goldman Sachs Anticipates Enhanced Earnings for Alibaba in Second Half, Reaffirms Buy Rating

Stock News06-11

Goldman Sachs has issued a research report indicating that the share price of Alibaba-W (09988) has declined 22% year-to-date, primarily due to downward revisions in profit forecasts driven by increased investments in consumer and AI. The bank anticipates that the cycle of earnings per share downgrades for Alibaba is nearing its bottom, with profit performance expected to improve in the second half of this year, which should provide support for the stock price. It maintains a "Buy" rating and a target price of HK$180.

The investment bank expresses confidence in Alibaba's leading position in AI and cloud computing, forecasting that cloud revenue growth will accelerate further. It projects that contributions from AI-related products to external cloud revenue will reach 50% within one year.

Goldman Sachs believes Alibaba's current valuation does not fully reflect its comprehensive AI capabilities and the potential of its international cloud business. While customer management revenue (CMR) may be impacted by a slowdown in retail sales in the second quarter, losses from other business segments are expected to gradually narrow, which will help stabilize overall profitability.

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