Alibaba: AI And Cloud Drives Future Growth; Initiate With 'Buy'

Hunter Wolf Research profile picture
Hunter Wolf Research
1.86K Followers
(10min)

Summary

  • Alibaba's AI and cloud businesses show strong growth potential, with advancements in AI models and increased enterprise investment in AI workloads.
  • The e-commerce business has stabilized with high-single-digit GMV growth and innovative tools like Quanzhantui, despite intense competition and market maturity.
  • Projected 5% revenue growth in FY25, driven by 2% e-commerce, 5% AI and cloud, and mid-teens growth in logistics.
  • Initiating a 'Buy' rating with a one-year target price of USD $150 per share, supported by DCF valuation and strategic focus on high-margin businesses.

Alibaba headquarter

maybefalse

Alibaba (NYSE:BABA) has extended their business far beyond e-commerce, growing in areas such as AI, cloud computing, logistics and digital entertainment etc. I am encouraged to see Alibaba has begun to stabilize their e-commerce business during the quarter. In my view, their unique

This article was written by

Hunter Wolf Research profile picture
1.86K Followers
More than 15 years of professional investment experience in global equities across all sectors. My investment style is fundamental, bottom-up, long-term, and quality growth-oriented. I am seeking companies specializing in niche markets, with strong growth potential, a solid management team, a sound capital allocation policy, and, most importantly, reasonable valuation. I do not chase quarterly results, nor do I follow the herd mentality. I do not use short-term stock performance as the measure of a company's quality. I am targeting to achieve a 15% annual return in my portfolio. I typically construct my portfolio with 15-20 stocks, focusing on diversification of holdings, risk management, macro-driven sector weights, and disciplined trading and valuations as key factors.Disclosure: Lighting Rock and I are working in the same investment team. I am writing here independently.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BABA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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