Hua Er Jie Jian Wen·2025-05-14 09:43Core Viewpoint - Morgan Stanley is optimistic about Alibaba's valuation, highlighting its dual role as both an AI enabler (cloud computing) and an AI adopter (especially in e-commerce), suggesting potential upside in cloud revenue growth and profit margins due to surging AI demand [1][2]. Group 1: AI Enabler - Alibaba Cloud is the only major cloud service provider in China offering substantial GPU capacity to external clients, expected to see revenue growth accelerate to 25% in FY2026, benefiting from explosive growth in AI inference demand [2][3]. - The cloud business is strategically focused on external clients, distinguishing it from competitors like Tencent and ByteDance, which have higher internal AI computing needs [5]. - Alibaba's cloud revenue growth is projected to increase from 13% in Q3 FY2025 to 18% in Q4 FY2025, reaching 25% in FY2026 [3]. Group 2: AI Adopter - As an early adopter of AI, Alibaba is integrating AI capabilities into its super apps (Taobao, Amap, DingTalk, Quark), leveraging proprietary e-commerce user data to enhance revenue through improved commission rates and ad conversion rates [6]. - The potential for revenue growth from AI integration in e-commerce is not fully reflected in the market, with projected GMV and CMR growth of 4% and 6% respectively for 2026, excluding AI's impact [6]. Group 3: Market Opportunities - Alibaba is entering the instant retail market, projected to reach a market size of RMB 2 trillion (approximately $267 billion) by 2030, with a compound annual growth rate of 20% [7]. - The integration of instant retail products into the Taobao app has led to over 10 million daily orders within six days of launch, indicating strong consumer demand [11]. - Alibaba's strategy for instant retail leverages Taobao's traffic and Ele.me's delivery capabilities without compromising profitability [11].