As soon as Alibaba's financial report is released, major banks raise their target prices one after another.

Chinese e-commerce giant Alibaba's U.S. stock (BABA.N) closed up 8.1% at $135.97 on Thursday, reaching a new high in over three years.

Alibaba's latest quarterly capital expenditures increased significantly quarter-on-quarter, indicating that the company's investment in the artificial intelligence (AI) sector is accelerating. Group CEO Eddie Wu stated on Thursday that Alibaba Cloud's revenue is in a phase of increasing growth, and over the next three years, the group's investment in cloud and AI infrastructure will surpass the total of the past 10 years.

Alibaba announced that for the third quarter of fiscal year 2025, ending last December, its adjusted (Non-GAAP) net profit increased by 7% year-on-year, exceeding market expectations. During the reporting period, the company's AI-related product revenue achieved triple-digit growth for six consecutive quarters, and cloud business revenue returned to double-digit growth.

Goldman Sachs: E-commerce business stabilizes, with upside potential in AI and cloud business

Goldman Sachs pointed out that as one of China's largest cloud service providers, Alibaba's AI and cloud computing strategy has had a positive impact on the entire data center industry, potentially leading to a reevaluation of industry valuations. On February 21, Goldman Sachs released a new report, significantly raising Alibaba Group's 12-month target price to $160/156 HKD, an increase of over 36% from the previous $117/114 HKD. Goldman Sachs maintains a "Buy" rating on Alibaba, believing that its core e-commerce business is stable and the accelerated development of AI and cloud business will lead to an increase in valuation.

Citi: Accelerating capital expenditures to capture AI and cloud growth

Citi stated that Alibaba's quarterly financial report marks a shift in market sentiment, with customer management revenue (CMR) growing year-on-year at an accelerated rate of 9% (compared to only 2.5% in the previous quarter) and Taotian Group's EBITA returning to a 2% year-on-year positive growth. The international e-commerce business is expected to achieve quarterly profitability in the next fiscal year, and capital expenditures are being accelerated to capture the turning point of the AI transformation era. The bank noted that as Asia's leading cloud service provider and having developed the Tongyi Qianwen model family, Alibaba is in a favorable position to capture the surging demand for cloud computing services in the coming years. Although higher depreciation and R&D investments will pressure profitability in the short term, management is confident that the additional costs will be quickly absorbed by the revenue growth brought by cloud demand. The bank raised its revenue forecast for the current fiscal year to fiscal year 2027 by 0.2% to 2.2%, as well as its non-GAAP net profit forecast for the same period by 7.5% to 21.3%. The target price for H-shares was raised from 137 HKD to 166 HKD, with a "Buy" rating, believing that accelerated cloud revenue and improved profitability will bring upside potential.

JP Morgan: Expecting positive market reaction to e-commerce and cloud business exceeding expectations

JP Morgan stated that it expects a positive market reaction to e-commerce and cloud business exceeding expectations, raising Alibaba's target price from $125 to $170.

Lyon: Accelerated growth in customer management revenue

Lyon released a report stating that Alibaba (BABA.US) exceeded expectations for its third fiscal quarter financial report ending last December, with revenue growing by 7.6% year-on-year to 280.2 billion RMB, surpassing the bank's expectations by 2%. The bank expects Alibaba's e-commerce customer management revenue (CMR) to maintain mid to high single-digit growth, and cloud computing is expected to recover to over 20% year-on-year growth in fiscal year 2026. With Alibaba selling Intime Retail and Yonghui Superstores, the group's profitability is expected to improve furtherTherefore, the adjusted profit forecasts for Alibaba for the fiscal years 2025, 2026, and 2027 have been raised by 3%, 8%, and 9% respectively, reflecting accelerated growth in cloud computing and reduced losses; at the same time, the target price for Alibaba has been raised from $125 to $165, with the rating upgraded to "highly confident of outperforming the market." According to Credit Lyonnais, international retail business grew by 35.7% year-on-year to RMB 31.6 billion, also exceeding expectations. In addition, Alibaba Cloud's revenue is strong, with AI product revenue achieving triple-digit year-on-year growth for the sixth consecutive quarter, indicating that Alibaba Cloud is in a leading position in the Asian market, with advanced open-source models and the most application scenarios.

Daiwa: Optimistic about customer management revenue growth in the next three to four quarters, cloud revenue growth accelerates and performs excellently

Daiwa's research report indicates that Alibaba (09988) surprised with its third-quarter results ending in December, and is optimistic about Alibaba's customer management revenue (CMR) growth in the next three to four quarters, believing this will drive a re-rating of the group's Taobao Tmall Group (TTG). Looking ahead to the fourth quarter of fiscal year 2025, Daiwa expects Alibaba's CMR to grow by 9.5% year-on-year, as the long-term penetration target for the full-site push will reach 30% of all merchants, and the return on investment for small and medium-sized enterprise merchants will continue to improve. The firm believes that the group's capital expenditures will be higher than its peers, which will help win market share in cloud business over the next few years and continue to drive a re-rating of its cloud business. The firm predicts that the group's cloud service revenue for the fourth quarter of fiscal year 2025 will increase by 15%. Daiwa forecasts that the group's capital expenditures for fiscal years 2026 and 2027 will reach RMB 103 billion and RMB 102 billion, respectively. The firm raised Alibaba's target price by 18%, from HKD 140 to HKD 165, maintaining a "buy" rating.

HSBC Global Research: AI Drives a Turning Point

HSBC Research published a report stating that Alibaba (09988.HK) exceeded expectations in core business revenue and profit for the third quarter ending last December. The report believes that this performance is mainly due to the growth of customer management revenue (CMR) and cloud computing business exceeding expectations. HSBC Research is optimistic about the revenue growth of Alibaba's cloud computing business, expecting the growth rate for fiscal year 2026 to be raised from 12% to 17%. At the same time, due to the strong rise in AI demand, there is room for upward adjustments in the forecasts for public cloud and AI cloud business. HSBC Research also noted that Alibaba's capital expenditures have increased, showing the group's confidence in the sustainability of demand growth for cloud business. Based on the AI-driven turning point, HSBC Research raised Alibaba's target price from HKD 125 to HKD 156 and reiterated its "buy" rating.

Jefferies: Raises target price based on stunning financial results

Jefferies stated that its performance exceeded expectations, with impressive results across all departments, maintaining a "buy" rating for Alibaba and raising its target price for U.S. stocks by 27% to $160.

BOCI: Artificial intelligence cloud is a highlight, customer management revenue growth accelerates driving profit increaseBOC International reiterated its "Buy" rating on Alibaba, raising the target price for Alibaba (BABA.US) from $103.9 to $151. This adjustment is based on an increase in cloud revenue growth forecasts due to the surge in demand for artificial intelligence, as well as raising the target price-to-sales ratio for that segment from 1.5 times to 4 times, resulting in a valuation of $20.1 per ADR for the cloud business. The firm also noted that the broader adoption of "full-site push" improves commission rates and enhances software service fees, driving higher growth in e-commerce customer management (CMR) revenue, leading to a revaluation of China's e-commerce business at a price-to-earnings ratio of 8.6 times, with the core e-commerce valuation per ADR raised by $26.7 to $106.8.

CMB International: CMR revenue exceeds expectations, cloud business value enters revaluation phase

CMB International's research report indicated that looking ahead, the firm expects GMV/CMR growth rates of 5%/8% for the March quarter. Excluding Hema and Intime, the overall revenue growth rate for the company is expected to be 8.3%. Adjusted EBITA is expected to see significant optimization, but Taotian may be affected by the Spring Festival investment, with EBITA profits expected to remain flat. Due to increased demand for large models and AI-related needs, the company anticipates annual capital expenditures exceeding 80 billion yuan over the next three years. The firm expects Taotian's profit growth rate to be 8% in the 2025 calendar year, cloud revenue to grow by 14%, overall company revenue to increase by 12%, and profit growth to potentially exceed 20%. Taotian's e-commerce market share remains stable, monetization rates are recovering, and breakthroughs in AI technology will also drive the revaluation of cloud business value. The firm assigns a 3 times 2025 calendar year price-to-sales ratio for cloud and a 13 times price-to-earnings ratio for e-commerce, raising the target price to $165/159 HKD, with the current price corresponding to a 3 times cloud price-to-sales ratio and an 11 times price-to-earnings ratio for e-commerce, maintaining a buy rating.

Huatai Securities: E-commerce business monetization better than expected

Huatai Securities stated that the effectiveness of Taotian's strategy to return to brand management as the main battlefield and the empowerment of AI large models on e-commerce advertising efficiency are the main drivers for the continuous improvement of its monetization rate in the future. Thanks to the year-on-year improvement in the monetization rate and healthy growth in paid GMV (the firm estimates a 3-4% year-on-year increase). In the third fiscal quarter of fiscal year 2025, Taotian's adjusted EBITA profit is expected to be 61.1 billion yuan, a year-on-year increase of 1.9%, reflecting the support from robust growth in high-margin CMR revenue. Looking ahead, the firm believes that due to effective monetization measures, Taotian's adjusted EBITA profit is expected to return to a sustained positive growth range