Alibaba (BABA), the Chinese e-commerce and cloud company, is emerging as a key player in China’s fast-growing AI market. Despite a weak economic backdrop and slowing IT spending, a recent Morgan Stanley survey shows that Alibaba is pulling ahead of its rivals.
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This leadership comes as the company prepares to report its Q4 FY26 earnings next week on May 13. Investors will be watching closely to see if its Qwen AI model is starting to drive real revenue growth.
Alibaba’s Qwen Model Dominates the Field
According to Morgan Stanley’s survey of 60 chief information officers (CIOs), Alibaba’s Qwen model is now a top choice across cloud, models, and applications. The share of tech leaders choosing Alibaba for AI deployment rose to 41%, up from 32% earlier.
“Alibaba is the biggest winner due to its full-stack AI capabilities,” Morgan Stanley analysts said. While ByteDance’s Doubao is emerging as a competitor, Alibaba remains a preferred partner for many companies planning to increase AI spending this year.
AI Spending Rises Despite Weak IT Budgets
This progress comes even as China’s IT market remains under pressure. Overall IT budget growth has slowed to 4.8%, the lowest level since 2020, as companies deal with economic uncertainty and deflation.
However, AI continues to stand out as a priority. The share of IT budgets going to AI is expected to nearly double this year, rising from 6.1% to 12.1%. This shift is starting to take spending away from traditional software, showing how important AI has become for businesses.
What to Expect from Earnings on May 13
As Alibaba heads into its earnings release next week, investors will focus on whether its AI strength can support growth despite broader challenges. Analysts expect attention on its cloud business, especially as demand for public cloud is likely to grow in the coming years.
Wall Street analysts expect earnings of $0.90 per share, down from $1.83 in the year-ago quarter. Meanwhile, revenue is projected at about $36.19 billion, representing an 11% year-over-year increase.
While some AI projects may be pushed out to 2027, Alibaba’s steady progress and strong infrastructure give it an edge over rivals like DeepSeek.
Is BABA Stock a Good Buy?
Wall Street remains constructive on the stock. Alibaba carries a Strong Buy consensus rating based on 14 Buy ratings and two Holds over the past three months. The average BABA price target stands at $184.07, suggesting roughly 38% upside from current levels.
