Alibaba (BABA) Stock Forecast & Price Target

Alibaba Group Holdings has demonstrated significant growth potential, with revised revenue estimates for FY26 and FY27 set at RMB 1,036 billion and RMB 1,154 billion, respectively, driven largely by the expansion of AliCloud and core e-commerce platforms. The integration of instant commerce into the Taobao app has resulted in a 20% increase in daily active users, enhancing user engagement and traffic, which directly contributes to revenue growth. Additionally, Alibaba's reported revenue of RMB 248 billion, reflecting a 5% year-over-year increase, indicates a robust performance with a strong outlook for sustained growth in key segments such as China E-commerce and Cloud services.

The negative outlook for Alibaba Group Holdings is primarily driven by a reassessment of their earnings before interest, taxes, and amortization (EBITA) margins, which have been lowered from previously projected figures of 26% and 34% to 23% and 28% for fiscal years 2026 and 2027, respectively. Additionally, the company's EBITDA fell to RMB 17 billion, falling short of the RMB 19 billion consensus due to ongoing investments in quick commerce, and overall adjusted EBITDA estimates for FY26 and FY27 were revised down to RMB 184 billion and RMB 262 billion, reflecting increased capital expenditures in this area. Furthermore, the introduction of modeling uncertainty related to cloud growth and a substantial quarterly loss exceeding RMB 36 billion, alongside negative free cash flow of RMB 21.8 billion, underscore the financial strain associated with these investments, suggesting challenges in achieving profitability.