What analysts are saying about Alibaba’s earnings report

Alibaba Group Holdings (NYSE:BABA) rose 3% in premarket trading after reporting that its cloud business saw a boost from AI. “Growth in our Cloud business accelerated from prior quarters, with revenues from public cloud products growing in double digits and AI-related product revenue delivering triple-digit growth,” stated CEO Eddie Wu. Early reactions from analysts are pouring in.

Manika Premsingh, Investing Group Leader for Green Growth Giants

“Alibaba’s (BABA) small revenue growth uptick to 5% YoY in Q2 FY25 (Q1 FY25: 4% YoY) isn’t much solace as the company’s adjusted EBITA continued to slide, with a 5% YoY contraction (Q1 FY25: -1% YoY). While the company attributes the bigger decline in EBITA to ‘the increase in investments in our e-commerce businesses’, the figures for the big e-commerce business, Taobao and Tmall Group [TTG] don’t provide any particular encouragement so far as its adjusted EBITA continues to shrink, even though revenues have seen a small YoY growth after a slight decline in Q1 FY25. The company’s cloud services division is a bright spot, but not enough to make up for the slack in e-commerce.

“Still, if the trend of falling price continues for BABA, after over 15% decline the past month, the stock could start looking attractive compared with peers like Temu owner PDD Holdings (PDD) and JD.com (JD) soon enough. Essentially, it remains one for the investment watchlist right now. A good time to buy could be very near.”

Seeking Alpha analyst Livy Investment Research

“It’s been a whirlwind for the Alibaba stock over the past month given the flux situation on Beijing stimulus and implications of the recently completed U.S. Presidential Election. While China’s recent string of stimulus updates have been a pervasive benefit for its broader markets, we’ve held onto our view that only names with supportive fundamentals and impending catalysts will prevail with durability. And Alibaba’s robust F2Q25 double-beat reinforces our confidence that it’ll emerge as an idiosyncratic winner, with its latest results and forward outlook setting a strong base for impending catalysts.”

“They include sustained TTG acceleration and margin accretion underpinned by a narrowing growth gap between GMV and customer management revenue observed in F2Q, thanks to improving monetization that’ll extend through F3Q given robust momentum during the annual 11.11 Singles’ Day shopping festival.”

“Acceleration in Alibaba Cloud, underpinned by a unique integrated cloud and AI developments strategy, also remains an additive growth driver to the company’s fundamental trajectory that remains underappreciated. This is further complemented by rising adoption of Alibaba’s proprietary Qwen LLM, which has become one of the leading models in the global open-source ecosystem.”

“The string of cloud and AI achievements effectively solidify our confidence that Alibaba makes a strong candidate for Apple’s eventual China AI partner as well. If materialized, the partnership could mark another key catalyst that would further lift the China-specific risk premium that’s been weighing the Alibaba stock’s multiple and re-rate its valuation higher from current levels.”