Daiwa Trims Target to HKD184 as Q3 Earnings Disappoint
Investment bank Daiwa has cut its 12-month target price on Alibaba (09988.HK) to HKD184 from HKD191, reacting to the company's disappointing third-quarter fiscal 2026 results. The bank also lowered its earnings per share (EPS) forecast for Alibaba for fiscal years 2026 through 2028 by 6-15%. The downgrade was prompted by weaker-than-expected cloud revenue growth and a decline in group profitability. The news contributed to a 4.318% drop in the company's Hong Kong-listed shares, with short-selling volume reaching $3.02 billion.
Quarterly Profit Plummets 67% Despite Cloud Growth
Alibaba's latest financial report showed a stark 67% year-over-year decline in profit for the October-December quarter, which fell to 16.3 billion yuan ($2.4 billion). This occurred even as total revenue grew just 2% to 284.8 billion yuan ($41.4 billion), missing analyst estimates. The profit collapse was attributed to growing marketing expenses and a fierce price war in the food delivery sector. In contrast to the weak group performance, the company's cloud business revenue jumped 36% to 43.3 billion yuan ($6.2 billion). Following the earnings release, Alibaba’s U.S.-listed shares fell more than 7%.
Alibaba Targets $100B in AI Revenue While Raising Prices
Despite the near-term profitability challenges, Alibaba's management reiterated its ambitious medium-term goals. The company is targeting $100 billion in external AI and cloud business revenue within five years and projects its quick commerce gross merchandise value (GMV) will hit RMB1 trillion by fiscal year 2028. To bolster monetization, Alibaba announced price increases of up to 34% for some of its cloud AI services. While Daiwa noted its positive long-term view on Alibaba's AI-driven cloud business, it also cautioned that increased spending on subsidies for user acquisition remains a major downside risk to profitability.
Edgen Stock·Mar 20 2026, 03:34
