Media reports suggest Alibaba is preparing to advance the separate listing of its chip business unit, "Pingtouge," with JPMorgan expressing surprise at the "timing of the reports." According to the ZF Trading Desk, on January 23, a team led by Cheng Yao, Head of China Equity Research at JPMorgan, published a research report. Using peer valuation benchmarks, they estimated Pingtouge's potential valuation could be between $25 billion and $62 billion, representing approximately 6% to 14% of Alibaba's current market capitalization. However, the report explicitly states that this figure is highly dependent on the actual future business scale, competitiveness, and the ultimate transaction structure. Analysts believe the current market focus is more squarely on verifying whether Alibaba Cloud and its core AI business can deliver tangible results. The company's choice to revive the "value realization" narrative appears more like a strategic communication posture, attempting to showcase asset value.
How was the $25-62 billion valuation calculated? Regarding Pingtouge's potential valuation, JPMorgan provided a wide range: $25 billion to $62 billion, or about 6% to 14% of Alibaba's current market cap. The report emphasizes this is an indicative estimate of "option value," derived by aggressively substituting 2026 revenue projections and making rough comparisons with domestic peers like Kunlunxin and Cambricon. This range is highly sensitive to three factors: what assets are actually sold externally, their competitiveness compared to domestic and international alternatives, and how the final transaction is structured. In other words, the number more closely answers "what would the market pay if Pingtouge became a separately valued 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 was surprised by Alibaba's choice to release this "value realization" signal to the market at this particular time. The report points out that the core market narrative and attention are currently tightly focused on tracking whether Alibaba's "Cloud + Generative AI" core business can reach an inflection point for monetization. Investors are most concerned about whether Alibaba Cloud's revenue can accelerate growth in the coming quarters. In contrast, "Pingtouge" 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 divisional economics for Pingtougo Semiconductor;
More data on external mass production adoption;
And signals regarding the proposed listing venue/timing.
Without these indicators, JPMorgan expects the initial excitement will fade.
Short-Term Sentiment, Long-Term Strategy JPMorgan judges that even if the "Pingtouge" news serves as a short-term sentiment catalyst, the market excitement it sparks may be difficult to sustain, ultimately reverting to Alibaba's fundamentals. Analysts are 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 growth in future quarters. The report notes that the upside potential from AI-driven cloud business, along with the strategic optionality of the entire platform, will outweigh the profit pressure from short-term investments in areas like local services and user acquisition. Simply put, they believe the Alibaba Cloud story deserves more attention than near-term costs. In summary, JPMorgan believes investors should focus their gaze on Alibaba's core integration process of cloud and AI, along with tangible evidence of its revenue growth. As for the "Pingtouge" capital story, until it truly gains independence and approaches an IPO, it should be viewed as an uncertain "extra option."
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