Bank of America has raised its price target for Alibaba shares from $175 to $178 and maintained its Buy rating. According to TradingView, which picks up the analysis, the stock jumped 4.5 percent on Friday after investors, in the bank's view, are still underestimating an upcoming profit increase. The source cites Thursday's close at $105.70.
Short & sweet
- The price target rises from $175 to $178; per the source, this implies upside of roughly 68 percent.
- For the September quarter the bank expects cloud revenue growth of 52 percent (previously 45 percent), and cloud margins are forecast to rise to 12.9 percent (previously 11.6 percent).
- Losses from Alibaba's AI laboratories and apps may shrink to 11 billion yuan (previously 14 billion yuan).
- The conventional e-commerce business remains a counterweight: customer management revenue is likely to fall 5 percent in the September quarter, and Chinese consumer spending is weak.
Open question
According to the source, the decisive question for investors is whether cloud growth can become large enough to offset weak consumer demand. The next quarter's results should show whether the costly AI investment cycle begins to deliver operational leverage.
Classification: For German companies this is mainly a signal about the market dynamics of Chinese cloud and AI providers. Whether it has consequences for vendor selection or dependencies depends on developments this analysis does not yet substantiate.
Sources
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