Concerns over Alibaba's Elevated AI Investment May Ease if Profitability Improves
Dow Jones10-20 11:46
0346 GMT - Concerns over Alibaba's elevated AI investment might ease if profitability in its AI and cloud business improves, Daiwa analyst John Choi says in a research note. Daiwa expects improving cloud margins to support a more self-funded AI investment model in fiscal year 2028. Additionally, most investors Daiwa met during an October U.S. trip remain underweight on China and its internet sector, they say. A rerating of China's internet sector is unlikely until investors gain conviction in Alibaba and Tencent, which would likely be the first stocks to be added if investors increase their China exposure, they note. Daiwa keeps a positive view on China's internet sector and its buy rating on Alibaba.
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