Yamato published research reports that confidence in Alibaba Cloud's business profit prospects has increased. Currently, it is predicted that cloud revenue will increase by more than 50% year-on-year in the second fiscal quarter up to the end of September this year. At the EBITA level, cloud business profits are expected to basically offset AI Labs' losses as soon as the third fiscal quarter, becoming an important milestone in the Group's AI investment, faster than previously anticipated. The bank maintained the second-fiscal quarter cloud EBITA profit margin forecast of 12%, but raised the third-quarter forecast from 12.4% to about 15%. It believes that AI accounts for a relatively high share of revenue, especially MaaS and IaaS. Coupled with strong pricing capabilities and economies of scale, it should drive profit margins to expand faster. Recently, management expects capital expenditure of about 200 billion to 300 billion yuan per year, adding about 2 to 3 gigawatts of production capacity every year, half self-built and half through leasing and partner operating facilities, which is expected to help reduce balance sheet pressure. The bank raised Ali's earnings forecast per share for the 2027-2029 fiscal year by 2% to 3% to reflect the improved profitability prospects of the cloud business, reaffirm the “buy” rating, and maintain the target price of HK$180.

Yamato published research reports that confidence in Alibaba Cloud's business profit prospects has increased. Currently, it is predicted that cloud revenue will increase by more than 50% year-on-year in the second fiscal quarter up to the end of September this year. At the EBITA level, cloud business profits are expected to basically offset AI Labs' losses as soon as the third fiscal quarter, becoming an important milestone in the Group's AI investment, faster than previously anticipated. The bank maintained the second-fiscal quarter cloud EBITA profit margin forecast of 12%, but raised the third-quarter forecast from 12.4% to about 15%. It believes that AI accounts for a relatively high share of revenue, especially MaaS and IaaS. Coupled with strong pricing capabilities and economies of scale, it should drive profit margins to expand faster. Recently, management expects capital expenditure of about 200 billion to 300 billion yuan per year, adding about 2 to 3 gigawatts of production capacity every year, half self-built and half through leasing and partner operating facilities, which is expected to help reduce balance sheet pressure. The bank raised Ali's earnings forecast per share for the 2027-2029 fiscal year by 2% to 3% to reflect the improved profitability prospects of the cloud business, reaffirm the “buy” rating, and maintain the target price of HK$180.