BABA(US:BABA) ZACKS·2025-03-24 14:15Core Viewpoint - Alibaba Group is emerging as a significant player in the AI sector, showcasing technological innovation and financial strength, presenting a strong investment opportunity for 2025 [1]. Financial Performance - Alibaba reported consolidated revenues of RMB280,154 million (US$38,381 million), an 8% year-over-year increase, with income from operations surging 83% to RMB41,205 million [7]. - The Cloud Intelligence Group's revenues grew 13% year-over-year, with AI-related product revenues maintaining triple-digit growth for six consecutive quarters [8]. AI Development and Innovation - Ant Group has achieved a 20% reduction in AI training costs by combining Chinese and U.S.-made semiconductors, demonstrating adaptability amid U.S. export restrictions [5][6]. - Alibaba has open-sourced its Qwen2.5-VL model and launched the Qwen2.5-Max model, which have shown leading results globally, with over 90,000 derivative models developed based on the Qwen family [10][11]. Business Segment Growth - The Taobao and Tmall Group saw a 5% revenue increase, while the Alibaba International Digital Commerce Group experienced a 32% year-over-year revenue growth [12]. - The company has been optimizing its balance sheet through strategic divestments, share buybacks, and debt management, repurchasing 119 million shares for US$1.3 billion [13]. Investment Outlook - The Zacks Consensus Estimate for fiscal 2025 revenues is projected at $138.29 billion, indicating a 5.97% year-over-year growth, with earnings estimated at $8.80 per share [18]. - Alibaba's stock is trading at a forward P/E of 12.52X, significantly lower than the industry average of 21.4X, suggesting it is undervalued and presents an attractive entry point for investors [20]. Conclusion - Alibaba is positioned as a strategic long-term investment, particularly for those interested in AI and digital transformation, due to its innovative capabilities, financial strength, and commitment to technological advancement [23].