09988 Should I Buy

JPMorgan's research report provided a constructive view on Alibaba (BABA-W) and recommended an Overweight rating based on the expectation that the company's share price will overcome short-term profit pressures. The analysts believe that a re-rating will occur once the monetization inflection point of Alibaba's cloud business and generative AI becomes more evident. They anticipate that Alibaba Cloud's revenue growth will accelerate as generative AI workloads transition from pilot phases to broader deployments, indicating the company's capability to capture AI-driven demand in China. However, the report also noted a reduction in earnings per share (EPS) forecasts for 2027 and 2028 due to increased investments in various sectors and challenges in domestic e-commerce monetization amid sluggish consumer spending. This suggests that while the long-term outlook remains positive, there are short-term challenges that could lead to further earnings declines and increased volatility in trading.