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Investing.com-- Analysts at Mizuho Securities raised their price target on Alibaba Group (NYSE:BABA) (HK:9988), citing improving fundamentals in the e-commerce and cloud businesses.
Mizuho raised PT to $159 from $149 and maintained an "outperform" rating.
Analysts said while Alibaba’s revenue and EBITDA came in lighter than expected due to divestitures and higher investment, core commerce revenue and cloud growth trends were stronger than anticipated.
They pointed to better advertising yields and rising transaction frequency from the company’s integrated commerce and on-demand offerings.
Mizuho expects Alibaba’s cloud revenue to accelerate in the coming quarters, driven by surging demand for generative artificial intelligence. The brokerage said Chinese firms are increasingly adopting Alibaba’s open-source models and infrastructure for training and inference across industries, including autos, education, and healthcare.
Commerce revenue grew 10% in the June quarter, with adoption of the Quanzhantui ad tool and higher user engagement from Alibaba’s push into instant shopping, which lifted Taobao’s monthly active users by 20%, analysts noted.
Management expects instant shopping to contribute an additional 1 trillion yuan in gross merchandise value by fiscal 2028.
Mizuho lifted its FY2028 EBITDA estimate by 3% on an improved synergy outlook.
Hong Kong-listed shares of the company surged 18.5% on Monday after the release of results. They traded slightly lower at HK$136.30 on Tuesday.