Damo: Giving Alibaba-W (09988) an “increase in holdings” rating, Alibaba Cloud's business will grow by more than 50% in the second quarter of next fiscal year

The Zhitong Finance App learned that Morgan Stanley released a research report saying that maintaining Alibaba's (09988, BABA.US) “gain” rating, the target price for US stocks is 180 US dollars; the bank is optimistic about Alibaba Cloud's accelerated external revenue growth and room for profit margin expansion.

The report mentioned that Alibaba Cloud's business will grow by more than 50% in the second quarter of fiscal year 2027. External revenue will grow faster than internal business, and is expected to accelerate further in the next 2 to 3 quarters. Currently, about 70% of Alibaba Cloud's revenue comes from external customers, of which about 35% comes from AI-related businesses.

The report points out that Alibaba Cloud's profit margin is expected to expand in the next few quarters, and may even break through 20% earlier than the original 5-year target, but currently profit margins are not the primary development priority. Although MAAS still accounts for a small share of the MAAS business at this stage, the main revenue still comes from infrastructure as a service (IAAS), but as application scenarios such as AI-generated content and robots expand, MAAS revenue is growing strongly, and the share will gradually increase in the future.

In terms of technology investment, the report's analysis indicates that as the commercial monetization model of third-party open source models matures, such as through revenue sharing mechanisms, Alibaba Cloud's monetization capacity is gradually increasing.