BABA-W (09988) declined over 3% in morning trading, falling 3.46% to HK$167.3 with trading volume reaching HK$12.741 billion as of press time.

JPMorgan released a research report ahead of BABA-W's upcoming quarterly results for the period ending September. The bank forecasts revenue will grow 5% year-on-year, while adjusted earnings are expected to decline 70% year-on-year to RMB 11 billion. Cloud business revenue growth is projected to accelerate to 30%, while customer management revenue growth is expected to maintain above 10%.

The bank noted that BABA-W's adjusted earnings during the period may experience a steeper-than-expected decline due to aggressive investments in AI and instant retail. However, JPMorgan believes these investments will further strengthen the group's long-term growth prospects in response to increased investment commitments.

JPMorgan predicts that Alibaba's investments across multiple business areas including the Tongyi Qianwen model, DingTalk, Quark, and Amap will lead to expanded losses in all other businesses outside of e-commerce, cloud, and international commerce for the quarter. The bank expects losses for the September quarter to reach RMB 5 billion, compared to RMB 1.4 billion in losses from the previous quarter. It forecasts that these losses may remain at similar levels for the next several quarters, with gradual improvement only as AI monetization accelerates over the next 2-3 years.

Regarding instant retail, JPMorgan predicts quarterly losses will expand to RMB 35 billion.