Batch Management Now Supported in Service Orders with Release Upgrade 2508

A new feature has been added to the service order process in software upgrade 2508, allowing batch-managed products to be used in service orders. In the service confirmation item, a "Batch" field has been added where the batch number of the product can be entered. This integration was previously not supported.

Bernstein Research has recently upgraded Alibaba Group (BABA) to "Outperform" with a $165 price target, signaling a shift in investor sentiment. The firm’s confidence in Alibaba’s AI and cloud-driven reinvention is evident in its strategic catalysts and long-term growth drivers [1].

Strategic Catalysts: AI and Cloud as Growth Engines

Alibaba’s $380 billion (RMB 380 billion) three-year investment in AI and cloud infrastructure has yielded tangible results. Alibaba Cloud’s revenue surged 26% year-over-year in Q1 2025, with AI-related products contributing over 20% of external customer revenue [3]. The integration of advanced AI models like Qwen3 has further solidified Alibaba’s position in the generative AI market [5]. Bernstein projects 25-30% revenue growth for Alibaba Cloud in fiscal year 2026, offsetting depreciation costs from aggressive capex and generating a 12% return on equity [1].

E-Commerce Stabilization: Balancing Innovation and Profitability

While Alibaba’s domestic e-commerce platforms (Taobao and Tmall) face slower growth, the company is stabilizing its ecosystem through strategic innovations. The “Taobao Instant Commerce” initiative, though reducing adjusted earnings by 21% in Q2 2025, is capturing the fast-growing quick commerce market, projected to reach $267 billion by 2030 [1]. International marketplaces like Lazada, Trendyol, and AliExpress contributed a 29% revenue increase in fiscal 2025, diversifying Alibaba’s geographic exposure [4]. AI integration is also enhancing monetization. AI-driven tools such as AI Search and AI Ads on Taobao are improving merchant productivity and consumer engagement, driving a 10% year-on-year growth in customer management revenue for the e-commerce segment [3].

Long-Term Growth Drivers: Financial Health and Strategic Flexibility

Alibaba’s strong financial metrics—38.8% gross profit margin, 12% ROE, and a 7.66 Altman Z-Score—underscore its resilience and capacity for reinvestment [1]. The company’s capital allocation strategy, prioritizing AI infrastructure over global e-commerce expansion, aligns with Bernstein’s thesis of capitalizing on China’s AI-driven growth [2]. Additionally, Alibaba’s exploration of spin-offs, such as its Banma autonomous driving unit, could unlock further value for shareholders [4].

Risks and Mitigants

Challenges remain, including regulatory scrutiny in the U.S. and EU and margin pressures from e-commerce subsidies. However, Alibaba’s $53 billion cash reserves, post-2024 governance reforms, and institutional buying activity suggest confidence in its long-term trajectory [1]. Analysts project a 7% CAGR in revenue and 11% in adjusted EBITDA from 2025 to 2028, driven by cloud expansion and AI adoption [4].

Conclusion

Bernstein’s upgrade reflects a compelling case for Alibaba’s valuation potential, anchored in its strategic realignment toward AI and cloud computing. As the company stabilizes its e-commerce ecosystem through innovation and international diversification, the long-term growth drivers—robust financials, AI-native infrastructure, and a favorable industry structure—position Alibaba to deliver outsized returns. For investors, the current price target of $165 implies an 18.42% upside, supported by a “Moderate Buy” consensus from 11 out of 13 Wall Street analysts [1].

References:
[1] Alibaba Group Announces June Quarter 2025 Results [https://www.businesswire.com/news/home/20250829875486/en/Alibaba-Group-Announces-June-Quarter-2025-Results]
[2] Bernstein upgrades Alibaba on AI optimism [https://finance.yahoo.com/news/bernstein-upgrades-alibaba-ai-optimism-144229365.html]
[3] Alibaba Reports 78% Jump in Attributable Profit for Q2 [https://www.ainvest.com/news/alibaba-reports-78-jump-attributable-profit-q2-2508/]
[4] Alibaba's June Quarter 2025 Results: A Turning Point for E-Commerce and Cloud Reinvestment [https://www.ainvest.com/news/alibaba-june-quarter-2025-results-turning-point-commerce-cloud-reinvestment-2508/]