UBS Raises Alibaba Price Target to $162, Keeps Buy Rating

UBS raised Alibaba's price target to $162 from $158 and maintained a Buy rating. The company's Q1 report addressed investor concerns, with strong growth in AI cloud and synergies from quick commerce investments. Despite investments, the firm sees a positive outlook for Alibaba.

Alibaba Group delivered strong results in the June quarter, showcasing robust growth across its core businesses. The company's AI and cloud infrastructure revenue grew by 26% year-over-year, driven by increasing demand for AI-related products and services. This growth is part of Alibaba's strategic focus on consumption and AI + Cloud, which has yielded significant synergies and new consumer milestones [1].

The company's quick commerce business, Taobao Instant Commerce, has seen substantial growth, contributing to a 25% year-over-year increase in monthly active consumers on the Taobao app within the first three weeks of August. This rapid growth is further supported by the launch of a cross-platform loyalty program that connects various consumer needs, enhancing user engagement and retention [1].

Alibaba's International Digital Commerce Group (AIDC) also performed well, achieving a 19% year-over-year revenue growth, primarily driven by strong performance from AliExpress and Trendyol. The company's commitment to improving operational efficiency has led to a significant narrowing of its losses, approaching breakeven [1].

Despite the investments in quick commerce and AI infrastructure, Alibaba's adjusted EBITDA decreased by 11%. However, the company remains optimistic about its long-term potential in AI and cloud computing, with AI-related cloud revenue growing at triple-digit rates for the eighth consecutive quarter [2].

UBS Group recently raised its price target for Alibaba from $158 to $162 and maintained a Buy rating, reflecting the positive outlook on the company's growth prospects. The analysts noted that Alibaba's strategic pivot towards AI and cloud computing, despite near-term profitability challenges, positions the company well for long-term growth [3].

In conclusion, Alibaba's Q1 2025 earnings report highlights the company's resilience and strategic focus on AI and cloud computing. While near-term profitability may be strained by increased investments in new business segments, the company's long-term potential in AI and cloud computing offers promising growth avenues.

References:
[1] https://www.alizila.com/alibaba-q1-results-deliver-strong-growth-in-ai-and-quick-commerce/
[2] https://www.ainvest.com/news/alibaba-ai-driven-growth-outpaces-revenue-decline-q1-earnings-report-2508/
[3] https://news.futunn.com/en/post/61364033/ubs-group-has-raised-the-target-price-for-mao-geping