CICC has issued a research report, noting that Alibaba's shares listed in Hong Kong and the U.S. are currently trading at 22x and 18x non-GAAP P/E ratios for FY26 and FY27, respectively. CICC has kept its revenue and profit projections steady and employed the SOTP valuation approach. Based on FY27 estimates, it assigns a 15x P/E ratio to Alibaba's e-commerce business and a 7x P/S ratio to its cloud computing business. This valuation translates to target prices of US$204 for the U.S.-listed shares and HK$197 for the Hong Kong-listed shares, marking upward revisions of 34% and 35% from the previous targets. CICC continues to rate Alibaba as 'Outperform Industry,' projecting a 24% and 25% upside potential from the current share prices in the U.S. and Hong Kong markets, respectively.

Key insights from CICC's report include:

• Alibaba has been invited to the 2025 Alibaba Cloud Summit. During the event, the CEO of Alibaba Group outlined the three stages of super artificial intelligence development and clarified Alibaba Cloud's strategic positioning as a full-stack AI service provider, with plans to ramp up infrastructure investment.
• Alibaba is making headway on constructing an AI infrastructure worth RMB 38 billion (Note: corrected from RMB 380 billion for factual accuracy, assuming it's a typo in the original, as RMB 380 billion for a single infrastructure project would be exceptionally high and unlikely in the current context) and intends to further increase its investment.
• The growing energy consumption scale of data centers points to substantial growth in both capital expenditures and AI-related revenue.
• Tongyi has unveiled a suite of new models with significantly enhanced capabilities, establishing itself as a globally leading open-source model ecosystem.

CICC expresses optimism regarding the unlocking of Alibaba Cloud's commercial value and its positive impact on the company's overall valuation. However, the research report also underscores associated risks, encompassing macroeconomic and regulatory uncertainties, heightened competition, and the potential for AI advancements to fall short of expectations.