Barclays raised its target price for Alibaba shares while maintaining an “Overweight” rating on the stock.

Alibaba Cloud’s revenue growth accelerated notably during the March quarter, fueled by surging demand for computing resources. Total cloud revenue increased 38% year-on-year, with external customer revenue growth reaching 40%.

Management expects annual recurring revenue (ARR) from AI products to reach RMB 10 billion before June, and further expand to RMB 30 billion by the end of the current fiscal year.

Currently, the company is generating close to US$10 million in monthly revenue from token sales and other AI agent-related income streams.

Barclays forecasts that Alibaba could triple this revenue scale by March 2027. The bank also noted that AI agents have opened up a massive potential market in enterprise productivity applications.

Alibaba remains China’s only hyperscale cloud service provider. Given the global shortage of computing resources, the company is expected to become one of the earliest beneficiaries of the worldwide AI boom.

Mizuho Securities also maintained its “Outperform” rating on Alibaba.

According to Mizuho, Alibaba’s AI-related revenue has already reached RMB 9 billion, while management expects annualized Model-as-a-Service (MaaS) revenue to grow from RMB 8 billion this quarter to RMB 30 billion by year-end — representing nearly fourfold growth.

External cloud revenue growth accelerated further from 35% in the December quarter to 40%, while AI revenue now accounts for approximately 30% of external cloud revenue.

Cloud business profit margins are expected to continue improving over the next one to two quarters from the current stable level of 9%.

On the e-commerce side, customer management revenue under comparable accounting standards rose 8%, while the unit economics of the Taobao and Tmall Group are expected to turn positive during certain months of fiscal year 2027.

Alibaba’s cloud business continues to show strong momentum. Revenue for the March quarter increased 38% year-on-year, largely driven by the robust 40% growth in external customer revenue.

In addition, reports suggest Alibaba and Tencent Holdings are jointly exploring an investment in AI startup DeepSeek, which is currently valued at more than US$20 billion. The potential investment comes as DeepSeek launches its first major funding round.

Market Analysis：

Alibaba’s EBITA for the quarter fell short of market expectations, mainly due to rising token demand and higher operating costs.

Mizuho expects market consensus forecasts to be revised downward to some extent.

However, the overall strong trend in AI cloud business growth is expected to continue supporting a valuation re-rating for Alibaba shares.