Alibaba (BABA) Stock Forecast & Price Target

Alibaba Group Holdings exhibited a positive outlook with raised revenue estimates for FY26 and FY27 to RMB 1,036 billion and RMB 1,154 billion, respectively, bolstered by strong growth in both its AliCloud and core e-commerce segments. The integration of instant commerce into the Taobao app led to a notable 20% increase in daily active users, enhancing user engagement and driving higher traffic throughout the platform. Additionally, Alibaba reported a revenue increase to RMB 248 billion, representing a year-over-year growth of 5%, with key segments such as Alibaba China E-commerce Group and Cloud showing robust growth rates of 16% and 34%, respectively.

The negative outlook on Alibaba Group Holdings' stock is attributed to a downward adjustment of its EBITA margin forecasts for the China Ecommerce Group, decreasing to 23% and 28% for FY26 and FY27, respectively, reflecting anticipated challenges in margin recovery. Additionally, the company reported an EBITDA of RMB 17 billion, falling short of consensus estimates due to persistent investments in quick commerce, leading to lowered adjusted EBITDA predictions of RMB 184 billion and RMB 262 billion for FY26 and FY27. Lastly, the company has been facing substantial losses, with quarterly losses exceeding RMB 36 billion, and negative free cash flow of RMB 21.8 billion, driven primarily by heightened spending in quick commerce and cloud infrastructure.