Goldman Sachs: Increased Alibaba-W (09988) AI Cloud and Computing Service Revenue Growth Forecast Target Price of HK$172 to maintain “purchase”

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Alibaba-W (09988), as a leading e-commerce and cloud technology company in China, is entering a stage of profit recovery, benefiting from the resilience of the core e-commerce business, prudent investment in instant retail business, and the continuous acceleration of artificial intelligence demand for the cloud computing business expansion between enterprises and developers; the bank maintained a “buy” rating with a target price of HK$172, and raised its revenue growth forecast for the 2027-2029 AI cloud and computing services by 53%, and 45% (originally from 39%) 53%, 38%, 33% ).

The report estimates that Alibaba's capital expenditure (capex) will total 712 billion yuan in the 2027-2029 fiscal year, mainly to expand AI servers and data centers. According to Goldman Sachs, Alibaba's overall IT electricity consumption will reach 20 gigawatts by the end of 2032 under an optimistic scenario. Among them, GPU rental prices and the ratio of leased computing resources are key factors driving growth.

In terms of capital, the bank expects Alibaba's funding gap to narrow further by the end of 2027 and turn positive in 2028. The key point is that the profit before tax, interest, depreciation and amortization (EBITDA) of the cloud business is expected to surpass the e-commerce business for the first time in the March quarter of 2028. This means that Alibaba's main source of cash flow will shift from a “retail-funded cloud business” model to a cloud-based business funding model.

In terms of profitability, according to the report, the bank raised its revenue growth forecast as the tight supply of chips is expected to continue to drive up prices in the short to medium term; at the same time, model as a service (MaaS) is expected to become the main contributor to AI business revenue by the end of 2028, accounting for 70% of fiscal year 2032.

The bank believes that Alibaba's competitive advantage lies in its full-stack technology integration. Its T-Head (T-Head) self-developed chips, Qwen models, and QwenWork and Qwen applications will differentiate it from emerging cloud enterprises or pure token factories that only provide GPU leasing. Furthermore, the bank expects the Group to increase investment in AI laboratories and applications in the next few years to cope with competition in the field of large-scale models and workplace agents.