Chinese e-commerce giant Alibaba is set to release its fiscal 2026 Q1 earnings report soon. According to Bloomberg analysts' expectations, revenue is projected to reach 253.419 billion yuan, up 4.19% year-on-year; adjusted EPS is expected to be 15.82 yuan, down 3.76% year-on-year; Taotian Group's revenue is forecast at 121.711 billion yuan, up 7.35% year-on-year; and Alibaba Cloud's revenue is anticipated to hit 31.861 billion yuan, up 20.01% year-on-year.

Review of Last Quarter's Performance

Earnings reports showed that Alibaba's Q4 revenue reached 236.454 billion yuan, up 7% year-on-year; non-GAAP adjusted net profit stood at 29.847 billion yuan, up 22% year-on-year; and adjusted earnings per share was 12.52 yuan, up 23% year-on-year.

By business segment:

• Taotian Group's revenue was 101.369 billion yuan, up 9% year-on-year;

• Alibaba Cloud's revenue reached 30.127 billion yuan, up 18% year-on-year, with AI-related revenue growing by triple digits for seven consecutive quarters;

• Local Services Group's revenue rose 10% year-on-year to 16.134 billion yuan;

• Big Entertainment Group's revenue was 5.554 billion yuan, up 12% year-on-year.

Key Focuses of This Quarter's Performance: AI-Driven Cloud Growth Accelerates; Flash Sales Investments Pressure Profits

Moderate Expected Overall Revenue Growth

Forward-looking reports from multiple securities firms indicate that Alibaba's fiscal 2026 Q1 revenue is expected to maintain low single-digit growth. Guosen Securities predicts quarterly revenue of 247.8 billion yuan, up 2% year-on-year; Guohai Securities forecasts 245.6 billion yuan, up 1% year-on-year. One key reason for the slowed revenue growth is the divestiture of businesses such as Sun Art Retail and Intime. For example, Orient Securities lowered its fiscal 2026 revenue forecast from 1.0642 trillion yuan to 1.0229 trillion yuan, closely linked to the delisting of related businesses. However, despite the overall slowdown, performance across business segments is divergent, with some segments still showing growth highlights.

Taotian Group

As the core of Alibaba's e-commerce business, Taotian Group is expected to maintain steady growth this quarter. Guosen Securities predicts its Q1 GMV (Gross Merchandise Volume) will grow 6% year-on-year. The company continues to invest in enhancing user experience, optimizing merchant services, and expanding new business models. For instance, during major promotion events, it actively drives marketing innovation, providing merchants with more traffic support and marketing tools to boost product sales. Meanwhile, as the consumer market gradually recovers, consumers' demand for online shopping has rebounded, creating a favorable environment for Taotian Group's growth. In terms of core commerce revenue, a 11% year-on-year increase is expected, mainly driven by site-wide promotion tools and 0.6% technology service fees, though growth may slow quarter-on-quarter due to seasonal factors.

International Digital Commerce

Alibaba's International Digital Commerce Group is poised to continue its rapid growth. Guohai Securities expects its quarterly revenue to reach 34.8 billion yuan, up 19% year-on-year and 4% quarter-on-quarter. Against the backdrop of expanding global e-commerce markets, Alibaba's international retail platforms such as AliExpress have achieved steady order growth by optimizing supply chains, improving logistics efficiency, and expanding into emerging markets. For example, AliExpress has expanded its "Choice" model to provide consumers with higher-quality, more reliable logistics and service experiences, enhancing the platform's competitiveness in international markets and driving growth in advertising and direct sales revenue. Meanwhile, Lazada has seen rapid order growth in key markets like the Philippines and Thailand through differentiated country strategies; Trendyol has maintained growth momentum and market leadership in Turkey.

Cloud Intelligence

Cloud Intelligence Group is a major highlight of this quarter's performance and is expected to be a strong growth driver. Both Guosen Securities and Orient Securities predict that Q1 cloud revenue will grow by around 22% year-on-year. Amid the current AI boom, surging downstream AI-related demand has strongly boosted upstream computing power needs. As a leader in China's cloud market, Alibaba held a 33% market share in Q1, ranking first, and has fully benefited from this AI dividend. Technically, Alibaba continues to advance AI 布局: it launched China's first hybrid inference model Qwen3 on April 29, followed by the Embedding series models and adaptations for Apple's MLX. On the application side, Kuaike launched its new "Deep Search" product on May 8, with MAU (Monthly Active Users) reaching 156 million by June, demonstrating Cloud Intelligence Group's technical strength and market influence in the AI field, which strongly supports revenue growth.

Local Services

Driven by Taobao Flash Sales, Local Services Group is expected to achieve significant revenue growth. Guohai Securities predicts combined revenue of Taotian Group and Local Services Group will reach 148 billion yuan this quarter, up 12% year-on-year. Since its launch, Taobao Flash Sales has developed rapidly: after announcing a 50 billion yuan direct subsidy program in early July, its business scale expanded quickly. Synergizing with Ele.me, it now handles over 80 million daily orders and has over 200 million daily active users (DAU). However, this growth is backed by high subsidy costs, which have exerted significant pressure on profits—a key focus for the market regarding Local Services Group's performance.

Cainiao and Big Entertainment

Cainiao Network's revenue is expected to decline slightly, with Guosen Securities predicting a 5% drop this quarter. This is likely due to the impact of the macroeconomic environment on logistics demand and intensified industry competition squeezing market share. The Big Entertainment segment is expected to maintain relatively stable growth, with Guosen Securities forecasting 5% revenue growth. The segment continues to invest in content innovation and user experience enhancement, gradually unlocking growth potential, but it is unlikely to become a growth driver for the group in the short term.

Views from Wall Street Analysts

Morgan Stanley, in its latest research report, lowered Alibaba's US stock target price from $180 to $150. The bank noted that Alibaba's investments in food delivery and flash sales businesses are estimated to have reached about 10 billion yuan in the first fiscal quarter ending June, which will pressure short-term profitability. It further predicts that such investments may double to 20 billion yuan in the second fiscal quarter, dragging down EBITA of Taotian Group and Local Services Group by over 40% year-on-year. Despite this, the bank remains optimistic about Alibaba's AI empowerment potential.

Benchmark maintained its "buy" rating on Alibaba with a target price of $176. It lowered fiscal 2026 Q1 and full-year profit expectations due to increased investments in food delivery and instant retail services, initially characterizing these investments as defensive moves to compete with JD.com. However, it noted that Alibaba has strong financial strength and retains its position as a leading generative AI and cloud infrastructure provider, viewing the stock's weakness as a buying opportunity.

Mizuho lowered Alibaba's target price from $160 to $149 while maintaining its "outperform" rating. Citing intensified competition in the local commerce sector, particularly in food delivery, which impacts profit margins, it expects a "significant margin contraction" in the second quarter on a sequential basis. Competitive pressures are projected to persist into the second half of 2025 and 2026, with Mizuho lowering related EBITDA forecasts due to Alibaba's 50 billion yuan subsidy program.

This content is generated based on Tiger AI and Bloomberg data, for reference only.