Analysts see long-term upside in Alibaba despite earnings miss

Luke Juricic

Thu, May 15, 2025, 7:28 AM 2 min read

Investing.com -- Alibaba Group Holdings’ (NYSE:BABA) latest quarterly results prompted a antagonistic effect from investors, arsenic shares fell 7.5%, but analysts astatine UBS and Morgan Stanley reiterated their bullish outlooks, seeing semipermanent spot successful the company’s halfway commerce and unreality businesses.

The Chinese e-commerce elephantine reported fiscal fourth-quarter gross of RMB236.45 cardinal ($32.6 billion), up 7% year-over-year but somewhat beneath statement expectations of RMB237.91 billion. Adjusted EBITDA roseate 36% to RMB32.6 billion, besides a humble miss. Results were weighed down by weakness successful logistics limb Cainiao and continued concern successful planetary and section services.

A agleam spot was Alibaba’s Cloud Intelligence Group, which delivered 18% year-over-year gross maturation to RMB30.1 billion. UBS noted triple-digit maturation successful AI-related revenue, which much than offset concerns astir borderline softness. “Stronger outer request station DeepSeek’s motorboat further reinforces unreality arsenic a semipermanent driver,” expert Kenneth Fong wrote, highlighting accrued adoption of AI infrastructure services.

Morgan Stanley’s Gary Yu echoed that view, calling unreality show a cardinal item of the quarter. “Cloud met our expectations and remains 1 of the astir important parts of the Alibaba concern story, peculiarly arsenic endeavor digitalization and AI adoption summation gait crossed China,” helium said. Yu besides noted that EBITA margins successful unreality were impacted by timing mismatches betwixt capex investments and gross generation... an expected tradeoff fixed the segment’s existent maturation phase.

Fong maintained a Buy standing and $180 terms target, citing unchangeable halfway commerce trends and narrowing losses successful non-core segments. “Taobao Tmall bushed connected lawsuit absorption gross by 3%, aided by improved instrumentality rates and promotional tools,” helium wrote. Morgan Stanley besides reiterated an Overweight standing and identical terms target, with Yu emphasizing that full adjusted EBITDA came successful 6% supra their expectations.

Alibaba’s shares fell 7.5% successful Thursday’s trading pursuing the report, reflecting capitalist sensitivity to header gross and EPS misses. Still, analysts pointed to positives, including ongoing stock repurchases, a higher full-year dividend of $2 per ADS, and continued escaped currency travel generation, signaling that some firms spot meaningful upside from existent levels.

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