Chinese e-commerce leader Alibaba (BABA) is preparing to unveil its Q4 FY25 results on May 15. Analysts on Wall Street are optimistic, anticipating earnings of $1.74 per share supported by revenues estimated at $33.25 billion. Ahead of this announcement, Morgan Stanley’s analyst Gary Yu has issued a Buy rating on the stock with a price target of $180, indicating a significant potential upside of approximately 36.7%.
Yu attributes Alibaba’s promising outlook to its robust positioning in the burgeoning AI sector. He identifies potential growth drivers for the company, especially in its cloud division. According to Yu, Alibaba has the capacity to become a leading AI enabler by capitalizing on increased demand for AI processing, a sentiment reinforced by the early success of technologies like DeepSeek.
He emphasizes that while competitors like Tencent (TCEHY) and ByteDance focus on internal AI advancements, Alibaba’s cloud arm, AliCloud, is well-equipped to serve external customers, indicating a competitive edge in the cloud market. Yu projects that Alibaba’s cloud revenue growth will accelerate, with a forecast rise from 13% growth in Q3 of FY25 to 18% in Q4, potentially reaching 25% growth in FY26.
Yu regards Alibaba as an early adopter of AI in e-commerce, making strategic use of its extensive customer data to enhance services and reclaim market share. He also suggests that there is room to increase its take rate— the percentage earned from each transaction—adding further potential for revenue growth.
Analysts remain largely enthusiastic about Alibaba’s prospects, with a consensus rating of Strong Buy. The stock enjoys 16 unanimous Buy ratings, and the average price target stands at $167.13, suggesting nearly 27% upside from its current price.
This optimistic outlook aligns with a broader trend in the tech industry, where companies are increasingly leveraging AI to enhance service offerings and drive growth. Alibaba’s strategic investments in technology and data analytics position it well for future expansion, reflecting a hopeful scenario for investors.