Citi analysts expect accelerating artificial intelligence (AI) cloud demand to support faster cloud revenue growth for Alibaba Group (NYSE:BABA).
In a note to clients on Monday, the analysts lifted their target price on the stock to US$217 per share from US$187, while reiterating their ‘Buy’ rating, calling Alibaba a “solid AI-play".
“Being one of the 5-6 global super cloud platforms with full-stack AI services, we believe Alibaba is well-positioned to capture the Artificial Superintelligence (ASI) evolution that should translate to sustainable cloud revenue growth with efficiency margins upside in coming years," the Citi analysts wrote.
The analysts added that they are presuming Alibaba’s existing 380 billion renminbi (Rmb) capex budget will be deployed by the second quarter of fiscal 2028, which is sooner than the three years anticipated.
The Citi analysts also expect the company’s cloud revenue to grow at a compound annual growth rate (CAGR) of 29% from fiscal year 2026 to 2028, up from its previous forecast of 26%.