Alibaba (BABA) Stock: Why Two Major Banks Just Slashed Their Price Targets

TLDR

• Jefferies lowered Alibaba stock price target to $225 from $231 but maintains Buy rating and calls it top 2026 pick
• Morgan Stanley cut target to $180 from $200, warning core e-commerce business is worsening due to weak consumer spending
• Cloud business grew 34% year-over-year driven by strong AI demand
• Stock fell 2.5% in premarket Friday after rallying 78% over past year
• China preparing to allow Nvidia H200 processor sales, benefiting Alibaba as major equipment buyer

Jefferies reduced its Alibaba price target to $225 from $231 while keeping a Buy rating. The new target represents 53% upside from the current price of $146.75.

Alibaba Group Holding Limited, BABA

The firm called Alibaba its top pick for 2026. Jefferies cited opportunities in AI and cloud computing as key drivers.

Morgan Stanley cut deeper, lowering its target to $180 from $200. The bank kept its Buy rating but flagged serious concerns.

The issue? E-commerce is struggling. Morgan Stanley said Alibaba’s core online shopping business has started to worsen.

Chinese consumer spending remains weak. Analysts expect pressure to continue through the first half of fiscal 2027 due to tough comparisons.

Morgan Stanley warned overall profitability could weaken in the near to medium term. The cloud business provides a bright spot but may not offset e-commerce declines.

Cloud Revenue Accelerates 34%

Alibaba’s cloud division grew 34% year-over-year last quarter. Jefferies said momentum continues with strong AI demand driving growth.

The firm expects solid progress in Quick Commerce across different metrics for the December quarter. Revenue growth reached 5.21% overall.

Quarterly results beat expectations last period. The cloud segment powered much of the outperformance.

Customer Management Revenue grew 10% year-over-year. Benchmark maintained a Buy rating, highlighting this metric along with cloud strength.

AI Investment Remains Priority

Jefferies anticipates continued spending in Alibaba’s “All Others” segment. This covers various AI initiatives the company is developing.

Bernstein cut its price target to $190 from $200 but kept an Outperform rating. The firm recognized Alibaba’s AI focus as a long-term positive.

Macquarie maintained an Outperform rating with a $218.80 target. The firm noted top-line growth from AI cloud demand and resilient advertising revenue.

The stock dropped 2.5% in premarket trading Friday. This followed a 5.3% gain Thursday.

Shares rallied 78% over the past year as Chinese tech stocks gained momentum. The recent pullback reflects concerns about consumer weakness.

China is preparing to allow sales of Nvidia’s H200 processor. Alibaba ranks as a top cloud computing provider and major buyer of Nvidia equipment.

The post Alibaba (BABA) Stock: Why Two Major Banks Just Slashed Their Price Targets appeared first on Blockonomi.