Alibaba: Buy Rating Backed by AI-Driven Cloud Growth, Improving Commerce Economics, and Path to Profitability

In a report released today, Thomas Chong from Jefferies reiterated a Buy rating on Alibaba, with a price target of $225.00.

Thomas Chong has given his Buy rating due to a combination of factors that highlight Alibaba’s long‑term growth potential and strategic positioning. He views Alibaba as a leading beneficiary of rising demand for AI and cloud services, expecting cloud revenue to continue accelerating on the back of strong AI-related workloads and applications. In addition, he believes the company is making meaningful headway in Quick Commerce, where operational synergies are starting to reduce segment losses, supported by improving order metrics and better unit economics. While near-term revenue and EBITA forecasts are slightly more conservative than consensus, he attributes this to cyclical factors such as a softer industry GMV environment and base effects in core commerce, rather than structural weaknesses.
At the same time, Chong sees the company’s heavier investment in AI initiatives—such as its Qwen app, DingTalk enhancements, AI-enabled devices, and Amap—as laying the groundwork for future monetization across both enterprise and consumer ecosystems. He also expects international digital commerce losses to narrow significantly year-on-year, signaling better operating discipline and a clearer path to profitability outside China. Taken together, these dynamics support his view that Alibaba can deliver improving profitability over time while expanding in high-growth, AI-driven markets, justifying a Buy recommendation despite elevated near-term spending and moderated expectations versus consensus.