JPMorgan raises target on Alibaba. Is 53% growth in a month just the beginning?

Analysts at JPMorgan have raised their target price for shares of Chinese Internet giant Alibaba by almost 45%. The company's 53% rally in September was the best in the Hang Seng Index, the main indicator of the Hong Kong stock market. This was led by the company's plans to increase investment in AI and a new partnership with Nvidia. Investors will now wait for the internet giant's upcoming quarterly earnings report.

Analysts at investment bank JPMorgan raised the target price of shares of Chinese holding company Alibaba, traded in Hong Kong, by almost 45%, setting the highest target among experts tracked by Bloomberg. The new target is HK$240 ($31) a share by the end of 2026, which implies a 31% rise from the closing level on Oct. 2. The recommendation on the securities is maintained at "above market" (Overweight).

Analysts led by Alex Yao noted that Alibaba's securities have outperformed the sector average by 364 percentage points over the past three months, Investing.com wrote. This performance is attributed to higher-than-expected revenue growth in the cloud business in the second quarter of fiscal 2025, as well as management's confident strategy in the food delivery and express commerce segments, JPMorgan noted.

That said, the bank estimates that the current share price at 12 projected earnings (for fiscal 2028) "leaves significant upside potential."

"Alibaba is willing to participate in every step - computing, platforms and applications - while directly improving seller economics in generative AI," Yao emphasized.

It is noteworthy that the target benchmark was raised by the same team of analysts who, in an editorial error in March 2022, labeled a number of Chinese internet companies "uninvestable," Bloomberg recalls.

In trading on Wednesday, Alibaba shares in Hong Kong added 3.4% and during the day reached the highest since August 2021. At the pre-market in the US, the company's receipts appreciated by 2.7%.

Alibaba shares in Hong Kong surged 53% in September, performing best among the Hang Seng Index components. The rally was driven by the announcement of the company's plans to increase investment in AI development beyond its earlier target of $53 billion, as well as news of a new partnership with AI chip maker Nvidia.

Investors' attention will now be focused on Alibaba's upcoming quarterly earnings report. Zacks analysts predict that the company will post earnings per share (EPS) of $1.03, down 52.09% from the same period last year. The consensus forecast for revenue is $34.09 billion, which implies a year-over-year growth of 1.14%. The report is expected to be published on November 21.

Last week, Morningstar analysts raised their target price on Alibaba shares by 49% to HK$260 respectively. That estimate implies a potential upside of 42% from current levels.

Recent years have been difficult for Alibaba: after Beijing criticized the company's co-founder Jack Ma, the authorities canceled the IPO of its $300 billion fintech platform Ant Financial and increased pressure on the holding company itself. This year, however, the authorities' rhetoric has softened: Ma met with Chinese President Xi Jinping, and the entrepreneur himself has become more involved in the life of the company, Invezz writes.

Meanwhile, Alibaba retains ambitions to become one of the key players in the artificial intelligence market. In 2024, the company unveiled several popular AI models and announced plans to increase spending on technology development beyond $50 billion. According to CEO Eddie Wu, global AI spending will reach $4 trillion by the end of the decade, and Alibaba intends to capture a significant share of this market.

This article was AI-translated and verified by a human editor