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2025-09-17 11:49:38
Goldman Sachs raises Alibaba's target price to HK$174, optimistic about the compound growth potential driven by cloud AI. Goldman Sachs raised Alibaba's (09988.HK) cloud valuation from US$36 to US$43 per ADS. Based on its assumption of cloud growth in the second to fourth quarters of fiscal 2026, it raised it to a year-on-year increase of 30% to 32% (originally 28% to 30%). Accordingly, it raised Alibaba's SOTP (segmental valuation method) 12-month target price from US$163 to US$179 for US stocks and from HK$158 to HK$174 for Hong Kong stocks. The bank maintains a "buy" rating. Goldman Sachs believes that the multi-chip strategy of China's cloud hyperscalers has updated the narrative of China's AI cloud industry (no longer relying solely on overseas chip supply), bringing compound growth potential to the industry, which supports the bank's recent upgrade of its preference for the cloud and data center sub-sectors. It also predicts that China's cloud service providers' (CSP) capital expenditure will increase by 39% year-on-year in the third quarter of 2025, which may promote the continued growth of AI cloud revenue.
