Key Takeaways
- Alibaba declined 2.9% in Hong Kong trading to HK$122.70
- Jefferies reduced BABA price target to $185 from $212, maintaining Buy rating
- Qwen AI promotional investments expected to pressure near-term profitability
- Non-core “All Others” division anticipated to report increased losses in Q1 2027
- Quick commerce division projected to show sequential improvement in March quarter
Alibaba shares experienced downward pressure in Hong Kong trading Thursday following a Jefferies analyst revision that lowered the firm’s price target, pointing to elevated artificial intelligence investments and expanding losses across peripheral business operations.
Alibaba Group Holding Limited, BABA
Shares declined 2.9% to HK$122.70, positioning the stock among the heaviest weights on the Hang Seng index, which retreated 0.6% during the session.
Jefferies adjusted its U.S.-listed share price target downward to $185 from the previous $212 level. The investment firm maintained its Buy recommendation.
The revised target incorporates two primary factors weighing on expectations. Alibaba continues ramping up promotional expenditures for its Qwen artificial intelligence suite. Additionally, peripheral business divisions face mounting losses.
Alibaba introduced Happy Horse, an AI-powered text-to-video application, during the early months of this year. Jefferies acknowledged the product’s successful market entry while highlighting that substantial promotional outlays surrounding Lunar New Year celebrations will likely compress profitability in upcoming quarters.
The company committed 3 billion yuan — approximately $431 million — toward Lunar New Year marketing initiatives. A significant share of these resources targeted user acquisition for the Qwen platform.
Such aggressive spending depletes resources rapidly, with financial projections beginning to reflect this intensity.
Challenges in Peripheral Business Segments
Alibaba’s “All Others” division, encompassing non-core retail and miscellaneous operations, faces projections of deeper losses during the March quarter. Enhanced subsidy programs and promotional campaigns drive these expanded deficits.
Looking toward fiscal 2027, Jefferies anticipates losses within this segment will shrink by half compared to the previous fiscal period. While this represents a positive long-term trajectory, the immediate quarters present choppier conditions.
Cloud Computing Delivers Consistent Momentum
Certain business units continue demonstrating resilience. Jefferies projects AliCloud will sustain its robust expansion trajectory with potential acceleration during the March quarter.
Cloud infrastructure represents among Alibaba’s most consistent growth engines, with the analyst citing this division as justification for preserving the Buy rating alongside the reduced price target.
The quick commerce segment also shows signs of sequential improvement anticipated for the March quarter, providing supportive evidence for the bullish thesis even as other areas encounter obstacles.
Jefferies preserved its Buy recommendation on BABA alongside the target reduction, indicating the firm continues identifying appreciation potential from present valuation levels.
