Alibaba Group has morphed into a worldwide wholesale digital marketplace in the more than two decades since its founding. And today it’s hustling to be a player in cloud computing.
Thanks to its record and growth prospects, Alibaba stock is a top pick at Jefferies. The firm has reiterated a Buy rating and $230 price target with about a month to go before the Chinese conglomerate’s next earnings report.
On Thursday, U.S.-listed shares closed down 4.1% at $173.68. Based on those moves, the firm’s price target suggests more than 32% upside.
Jefferies expects Alibaba to “demonstrate solid execution” with its quick commerce strategy, or the ultrafast delivery of groceries and daily essentials over its Taobao app and Ele.me platform.
The expansion into quick commerce could be considered a defensive move in a crowded domestic market. Alibaba has faced increasing pressure from rivals such as Meituan, essentially an all-purpose delivery app.
But Alibaba could lose ground in other areas.
Jefferies expects to see higher losses across other lines of business due to the cost of AI model training and investments in feature enhancements for platforms like Amap, Alibaba’s digital navigation app.
Analysts at the firm forecast 2% total revenue growth in the September-ended quarter, largely in line with consensus and the firm’s previous estimates. Revenue in Alibaba’s Cloud Intelligent Group could grow 30% from last year, fueled in part by AI demand as customers switch to GPU computing, analysts posited.
Jefferies expects Alibaba’s International Digital Commerce Group, which includes e-commerce platforms AliExpress and Lazada, to post a quarterly loss of 36 million yuan, lower than consensus calls for 41 million yuan and the firm’s previous estimate of 63 million yuan.
Both platforms are coming under pressure. AliExpress faces stiff competition from Temu and Amazon.com; Lazada, which is popular in Southeast Asia, contends with the likes of Shopee and Bytedance’s TikTok Shop.
Even in the face of competition, U.S.-listed shares of Alibaba have been on a tear, benefitting from sustained enthusiasm for artificial intelligence. The company has made a push to embrace the technology, pledging to build new data centers overseas and increase AI spending.
Just a few weeks ago, Alibaba’s cloud computing division debuted Qwen3-Max, or what it called the company’s “largest and most capable” AI model to date.
Citi Research analysts expect to see this increased spend reflected in adjusted earnings before interest, taxes, depreciation, and amortization.
As Alibaba “steps up to meet accelerated demand of AI cloud/native apps, fast-paced upgrades and releases of various internal applications and new versions of large models,” this should lead to higher costs, the analysts wrote.
Still, Citi rates Alibaba at Buy with a $218 price target, up slightly from $217.
Of 56 analysts tracked by FactSet, 51 rate Alibaba at Buy or the equivalent. Four rate it at Hold, and one at Sell.
Alibaba was named a Barron’s stock pick just shy of a year ago. Since then, shares have gained 77%.
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