[Stock Prediction] Alibaba’s Profits Are Falling. So Why Is Wall Street Getting More Bullish?

Tiger_Earnings
08-18 14:19

Alibaba reports fiscal Q1 2027 earnings before the U.S. market opens on August 20. Wall Street is expecting revenue of around RMB 268.5 billion, up 13.6% year over year, while adjusted EPS is expected to fall about 10.7% to RMB 11.18. Adjusted net income is seen dropping roughly 16% to RMB 25.2 billion, according to Bloomberg. $Alibaba(BABA)$ $BABA-W(09988)$

Is all that AI spending finally starting to pay off?

Alibaba has been pouring money into AI infrastructure, cloud capacity and instant commerce. Last quarter, Alibaba Cloud revenue jumped 38% to RMB 41.6 billion, while AI-related products accounted for roughly 30% of external cloud revenue.

Bloomberg expects Alibaba's cloud revenue to grow roughly 42% this fiscal year. Since the May earnings report, consensus estimates for Cloud Intelligence adjusted EBITA have also risen around 12%–13%, with investors increasingly betting on profit growth of more than 70%.

What to watch？

Can cloud growth accelerate again? Cloud revenue grew 38% last quarter. With the market now looking for growth above 40%, simply meeting expectations may not be enough.

Is AI becoming a real profit driver? Alibaba is spending heavily on models and infrastructure. Investors will want more evidence that AI demand is translating into sustainable revenue and better cloud economics.

How much is instant commerce still costing? Taobao Instant Commerce has been a drag on earnings. If losses narrow faster than expected, Alibaba's core China e-commerce margins could begin to recover.

Will $Alibaba(BABA)$ rally or pull back after earnings? Share your prediction below!

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voteHow will BABA close after its earnings report?(Single choice)
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