Goldman Sachs published a research report stating that after Alibaba's (09988.HK) stock outperformed the broader market, the narrative has been reshaped. The firm raised its capital expenditure forecast for Alibaba’s fiscal years 2026 to 2028 to one of the highest in the market at RMB 460 billion. Supported by breakthroughs in multimodal AI models and an increasingly diversified chip supply, Goldman Sachs increased its cloud revenue growth projections to 31%, 38%, and 37% year-on-year growth rates over the next three quarters.
Goldman Sachs raised its 12-month target price for Alibaba (BABA.US) from $179 to $205 and for Alibaba (09988.HK) from HK$174 to HK$199. This adjustment reflects stronger visibility in profitability within its e-commerce foundation and international cloud growth potential. The firm views the recent stock price weakness/correction as an attractive "buy" opportunity and maintains a "buy" rating.
The firm noted that despite a significant decline in group profitability due to investments/losses in fast-moving consumer goods, Goldman Sachs believes the market should focus on early signs of profit growth recovery on the Taobao-Tmall platform, Alibaba Cloud’s unique full-stack AI capabilities, and its potentially profitable local services platform. These factors support a renewed narrative around Alibaba’s leadership in AI + daily consumption (Taobao + AutoNavi) and AI + hyperscale cloud operations.
Goldman Sachs introduced a framework to evaluate the growth outlook for AI cloud and raised its revenue growth forecasts for Alibaba Cloud for fiscal years 2026 to 2028 to 33%, 29%, and 19%, respectively. The firm also increased its valuation of Alibaba Cloud to $54 per share (previously $43).
