Ge Long Hui·2026-01-13 12:19Core Viewpoint - The article focuses on Alibaba Cloud's strategic transformation and development prospects in the AI era, emphasizing its full-stack technology layout and dual-driven growth logic from domestic and international markets [1][2]. Group 1: Full-Stack Technology and Competitive Advantage - Alibaba Cloud is enhancing its strategic positioning by building a full-stack technology system that covers large models, intelligent computing infrastructure, and AI development platforms, thereby establishing a competitive moat in the AI era [1]. - The Tongyi series models are leading globally through an open-source strategy, significantly increasing capital expenditure plans while developing core hardware in-house, supported by a global infrastructure network of 29 regions and 92 availability zones for scalable deployment [1]. - The Bailian platform and Modao community create a closed-loop developer ecosystem, forming a unique business model that drives model open-sourcing, monetizes computing power, and enhances ecological value, thereby continuously strengthening technological barriers and ecological advantages [1]. Group 2: Growth Drivers and Market Potential - The estimated revenue CAGR for Alibaba Cloud is expected to exceed 30% over the next three years, driven by domestic AI model training and inference demand, as industries like internet, finance, and automotive accelerate their intelligent transformation [2]. - Alibaba Cloud is leveraging benchmark case replication and cross-selling strategies to continuously increase market share in the domestic market, while its overseas business is expected to become a core growth driver through global data center expansion and international adaptation of AI products [2]. - The company serves over 220,000 outbound enterprises and attracts international clients like Airbnb through the advantages of the Tongyi Qianwen open-source model [2]. Group 3: Profitability and Valuation - There is significant potential for profit margin improvement, with estimates suggesting that the profit margin could exceed 15% as AI revenue and high-margin overseas business proportions increase, alongside cost scale effects [2]. - The market has previously focused on short-term investment pressures, overlooking the dual profit elasticity from revenue structure optimization and cost leverage release driven by AI [2]. - Currently, Alibaba's shares are trading at 26/18 times FY26/FY27 non-GAAP P/E, with target prices set at $204 for US stocks and HK$197 for Hong Kong stocks, indicating an upside potential of 34.5% and 35.1% respectively [2].