Alibaba Considers Spinoff of T-Head Chip Unit to Capture High Valuations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Source: Benzinga
- Spinoff Plan: Alibaba is reportedly considering a spinoff and separate listing for its T-Head chip-making unit, aiming to leverage the high valuations of Chinese AI chipmakers to enhance shareholder value, with expectations for completion in the next three to four months.
- Market Reaction: Following the Bloomberg report, Alibaba's New York-listed stock surged 5%, having more than doubled in the past 52 weeks to a market cap of $423 billion, narrowing the gap with Tencent, indicating positive market sentiment towards the spinoff plan.
- Revenue Growth: Alibaba's latest earnings report revealed a 5% year-over-year revenue increase to 248 billion yuan ($35.6 billion) for the quarter ending in September, with its cloud division showing a strong 34% revenue growth, reaching approximately 40 billion yuan, further solidifying its market position.
- Industry Trend: The spinoff plans for Alibaba's T-Head and Baidu's Kunlunxin reflect the heightened market interest in AI chip technology, driven by surging demand in China, potentially attracting more investment to support their ongoing development.
Analyst Views on BABA
Wall Street analysts forecast BABA stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BABA is 203.66 USD with a low forecast of 172.00 USD and a high forecast of 230.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
13 Buy
1 Hold
0 Sell
Strong Buy
Current: 171.370
Low
172.00
Averages
203.66
High
230.00
Current: 171.370
Low
172.00
Averages
203.66
High
230.00
About BABA
Alibaba Group Holding Ltd is an investment holding company mainly engaged in the provision of technology infrastructure and marketing platforms. The Company operates its business through nine segments. The China Commerce Retail segment is engaged in the China commerce retail business. The China Commerce Wholesale segment is mainly engaged in the operation of 1688.com. The Cloud Intelligence segment provides cloud services. The International Commerce Retail segment provides customer management services, sales of goods and logistics services. The International Commerce Wholesale segment is mainly engaged in the operation of Alibaba.com. The Cainiao Represents Logistics Services segment provides fulfilment services. The Local Services segment’s revenue includes platform commissions, logistics services revenue. The Digital Media and Entertainment segment engages in the operation of Youku and Alibaba. The All Others segment is mainly engaged in the Sun Art, Freshippo and other business.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
