CICC: Maintaining Alibaba-W's (09988) “Outperform the Industry” rating target price of HK$197
The Zhitong Finance App learned that CICC released a research report saying that currently Alibaba (09988, BABA.US) Hong Kong stocks and US stocks both trade at 22 and 18 times the FY26 and FY27 non-standard price-earnings ratios. The bank kept its revenue and profit forecast unchanged. Based on the SOTP valuation, the e-commerce business was given 15x P/E and 7x P/S for the cloud computing business based on FY27, corresponding to the target prices of US stocks and Hong Kong stocks of 204 US dollars and 197 HKD. Mainly due to the positive progress of cloud computing and an upward shift in the valuation center, increasing 34% and 35% respectively from the previous target price, maintaining the outperforming industry rating. There is room for improvement of 24% and 25% compared to current Hong Kong stock prices and US stock prices.
CICC's main views are as follows:
The company's recent situation
The bank was invited to attend the 2025 Alibaba Yunqi Conference. At the conference, Wu Yongming, CEO of Alibaba Group and Chairman and CEO of Alibaba Cloud Intelligence Group, mentioned the three stages of the path to super artificial intelligence. Alibaba Cloud is positioned as a full-stack artificial intelligence service provider and announced that Alibaba will increase its investment in infrastructure. Zhou Jingren, CTO of Alibaba Cloud Intelligence Group, explained in detail the layout and latest developments of Alibaba Cloud from the perspective of big models, AI applications, and AI infrastructure.
Alibaba Cloud's investment further increased
Ali said it is actively promoting AI infrastructure construction of 380 billion yuan and plans to add more investment. Compared with 2022, the energy consumption scale of Alibaba Cloud's global data centers will increase tenfold by 2032. Nvidia indicates that every 1GW of incremental energy consumption requires 50 billion US dollars in AI infrastructure investment. Even considering the differences in construction costs between China and the US and the differences in chip usage, the bank expects an increase in the scale of energy consumption in data centers to mean a significant increase in CAPEX investment and AI-related revenue.
Tongyi released a series of new models to create an operating system for the AI era
Recently, Tongyi released the quadrillion parameter flagship model Qwen MAX, the native full-modal large model Qwen3-Omni, the visual understanding model Qwen-Image, the open source image editing model Qwen-Image, the upgraded version of Qwen3-Coder, the audio-visual synchronous creative engine Tongyi Wanxiang 2.5 preview, and the enterprise-grade voice base model Tongyi Baiyi. The model capabilities have been improved comprehensively. The bank believes that Tongyi is the world's leading open source model ecosystem, with more than 170,000 derivative models and the highest number of derivative models in the world. It is an operating system in the AI era.
The bank believes that Alibaba Cloud has full-stack capabilities in the era of artificial intelligence. From AI service platforms such as Tongyi Big Model, Bailian, and PAI to the number one AI infrastructure and computing network in China, Alibaba Cloud has leading supply-side advantages and developer stickiness. As AI demand continues to develop, Alibaba Cloud will benefit in all dimensions. The bank is optimistic about the continued release of Alibaba Cloud's commercial value and the continued boost to the company's valuation.
Risk warning: Macroeconomic and regulatory uncertainty, increased competition, and AI progress falls short of expectations.