Investing.com -- Mizuho analysts reiterated their Outperform rating on Alibaba (NYSE:BABA) and raised their price target from $140 to $170, citing a clear AI product roadmap and accelerating cloud revenue growth.
In its AI deep dive, Mizuho outlined three key reasons for its bullish stance:
Firstly, the company’s strong AI foundation. “We believe the company has rock-solid building blocks for AI investments going from scaling model to AGI, building platform for model APIs to accelerate application deployment for customers, and ultimately providing end-user solutions directly across industries,” the analysts wrote.
Next (LON:NXT) is its operational efficiency. Mizuho says Alibaba’s AI efforts will improve internal productivity, particularly in e-commerce.
“We anticipate AI to improve engagement, product recommendation and conversions, as BABA shifts from ML to Gen-AI to provide better context and relevancy for consumers,” Mizuho noted.
Finally, the firm highlighted BABA’s cloud growth acceleration. Mizuho raised its FY26 cloud revenue growth forecast for the company from 13% to 17% YoY, citing stronger AI adoption by enterprises and rising inference demand.
The firm says that Alibaba’s AI strategy revolves around three core pillars: intelligence (scaling its Qwen LLM to AGI), enterprise adoption (providing AI model APIs for application deployment), and direct end-user AI solutions (such as workflow automation agents).
“AliCloud can upsell clients by providing a full stack, end-to-end AI solution that could lead to revenue growth acceleration and margin expansion,” Mizuho wrote.
The firm expects AI-driven efficiency gains to help non-TTG businesses reach breakeven in two years, potentially eliminating 20 billion RMB in losses and boosting EBITA by 11%.
With 380 billion RMB in AI investments planned over three years, Mizuho sees Alibaba as well-positioned for long-term AI growth and has added BABA as a Top Pick in Asia Internet.