JPMorgan has released a research report reiterating its "Overweight" rating on Alibaba-W (09988). The report notes that the firm has lowered its revenue and adjusted earnings per share forecasts for Alibaba for fiscal year 2026 by 1% and 10%, respectively, reflecting the company's December quarter results. For fiscal year 2027, revenue and adjusted EPS forecasts were reduced by 3% and 5%. Consequently, JPMorgan has adjusted its price target for Alibaba's US-listed shares (BABA) from $215 to $205 and for its Hong Kong-listed shares from HK$210 to HK$200.

Alibaba's financial results for the quarter ending last December highlight a concrete and verifiable investment case. The current market valuation of Alibaba appears to only account for the value of its domestic e-commerce business. JPMorgan estimates that Alibaba's domestic e-commerce profits will reach approximately 196 billion yuan in fiscal 2027. Applying a price-to-earnings ratio of about 10 times suggests that the valuation entirely overlooks and assigns no value to Alibaba Cloud and its instant retail platforms.

The report points out that revenue growth for Alibaba Cloud has recovered to 36% in the most recent quarter, up from a low of 7% six quarters ago. Revenue from AI products has now recorded triple-digit growth for ten consecutive quarters. Management has set a target for the cloud business to achieve $100 billion in revenue within five years, implying a compound annual growth rate of approximately 47%. JPMorgan believes that recent quarterly data has not contradicted the feasibility of this trajectory. If this target is met and the business receives a reasonable valuation, the cloud segment alone could be worth $400 billion, exceeding Alibaba's current total market capitalization of approximately $298 billion.