Alibaba Group (BABA) is focusing on cloud and artificial intelligence (AI) to boost growth, revealing at its Apsara Conference plans to expand global data center capacity to over 20 gigawatts by 2032. The company is targeting new regions, including Türkiye, Finland, and the Netherlands, and announced the upcoming Zhenwu V900 chip, set to launch in early 2027. In the first quarter of fiscal 2027, AliExpress achieved operating profit due to improved logistics and cost efficiencies.
Alibaba Cloud reported a 45% year-over-year revenue increase to RMB48.4 billion, especially driven by AI product sales, which reached RMB12.4 billion, marking their twelfth consecutive quarter of significant growth. However, international E-commerce revenues declined by 1% to RMB27.8 billion due to tariffs and geopolitical challenges. The company’s capital expenditure rose 75% to RMB67.7 billion, resulting in a free cash outflow of RMB44.7 billion, a substantial increase from RMB18.8 billion the previous year.
Looking ahead, Alibaba anticipates accelerated cloud growth and margin expansion, with projected model-as-a-service annual recurring revenues of over RMB16 billion by August, aiming for RMB100 billion in external cloud revenues by 2030. Year-to-date, BABA shares have dropped 25.8%, significantly underperforming related sectors, while the trailing 12-month price/earnings ratio stands at 47.7X, in contrast to the sector’s 27X.
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