Morgan Stanley cut its price target on Alibaba to $180 from $200 in a research note released Thursday, pointing to a worsening outlook for the company’s core e-commerce business, even as growth in its cloud division remains solid.
Analyst Gary Yu maintained an Overweight rating on the stock but cautioned that Alibaba’s core e-commerce operations have begun to weaken due to soft consumer demand. He added that pressure on the segment could persist into the first half of fiscal 2027, partly because of tough year-on-year comparisons.
Despite the lower target, Morgan Stanley said Alibaba’s cloud unit continues to strengthen the company’s position as “China’s best AI enabler.” The bank expects revenue at Alicloud to accelerate to at least 35% year-on-year, while EBITA margins are forecast to remain stable at around 9%.
In contrast, customer management revenue is expected to slow sharply. Yu projects growth of just 3% year-on-year, down from 10% in the second quarter, citing weaker online retail sales and intense competition across China’s e-commerce sector. As a result, China e-commerce EBITA, excluding quality control costs, is forecast to decline by 3%.
Overall profitability is also set to deteriorate. Morgan Stanley estimates consolidated adjusted EBITA will fall 45% year-on-year to RMB 30 billion, driven in part by widening losses in the “All Others” segment. That unit is expected to post a RMB 7 billion loss, largely due to rising AI-related expenses.
Reflecting these pressures, the bank reduced its adjusted EBITA forecasts for Alibaba by 7% for fiscal 2026 and 15% for fiscal 2027, while leaving its cloud valuation unchanged at $84.
