Alibaba Bets on AI for Growth, But Slowing Core Commerce Tempers Near-Term Outlook
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Alibaba is betting on AI to drive future growth, seen in executive appointments, merchant tools, and recent investments in AI startups like $1B in Moonshot AI.
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Cloud services are currently small at 11% of revenue, but saw 51% EBITDA growth. Alibaba hopes AI demand and price cuts will further boost cloud.
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However, main commerce platforms like Taobao saw slowing growth last quarter to just 6%, presenting near-term concerns.
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Valuation remains attractive with forward P/E of 11.7x, below historical average of 25.7x.
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Upside if cloud and AI bets pay off, but weak core commerce raises doubts. Signs of turnaround needed next earnings report.