Key Takeaways
Goldman Sachs reiterated its Buy rating on Alibaba Group Holding (NYSE: BABA), setting a $186 price target for the US shares while citing the company’s aggressive push into the AI agent market and its strong cloud revenue goals.
The bank believes Alibaba's current valuation has yet to fully reflect its comprehensive AI strategy and international cloud potential, according to a research report published after the company's recent Cloud Summit in Hangzhou.
The report highlighted Alibaba's annual recurring revenue (ARR) target for its Model-as-a-Service (MaaS) offering, which aims for RMB 30 billion by the end of fiscal year 2027, up from an expected RMB 10 billion in the June quarter. Goldman expects this AI-driven growth to help Alibaba's earnings per share resume strong year-over-year growth of 32% and 54% in fiscal years 2027 and 2028, respectively.
Goldman's endorsement reinforces the view that AI is a critical growth driver for the Chinese tech giant. The bank expects the group to increase investment in AI enterprises and consumer applications over the next 12 to 24 months while still achieving double-digit profit growth, signaling confidence in the company's long-term strategy.
At the summit, Alibaba management emphasized that the industry is at a critical inflection point in the development of Artificial General Intelligence (AGI). The company's strategy involves a large number of AI agents, powered by its own models, taking on a greater share of tasks and becoming a primary interface between humans and the digital world. This comprehensive portfolio of AI agent products is expected to be a key driver in reaching its ambitious MaaS revenue targets.
The "Buy" rating was maintained for both Alibaba's Hong Kong-listed shares (9988.HK) and its US-listed stock (BABA.US). The price target for the Hong Kong shares was set at HKD 180.
The renewed focus on AI and cloud computing represents a significant strategic direction for Alibaba. The positive assessment from a major investment bank suggests that this strategy is resonating with the financial community, which could provide a tailwind for the stock. Investors will be closely watching the execution of the MaaS strategy and the growth in cloud revenue in the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
