Morgan Stanley and Jefferies Stay Positive on Alibaba (BABA)

Core Viewpoint - Alibaba Group Holding Limited (NYSE:BABA) is recognized as one of the leading AI stocks experiencing significant growth, with positive ratings from major financial institutions like Morgan Stanley and Jefferies [1][3]. Group 1: Analyst Ratings and Price Targets - Morgan Stanley has reiterated its Overweight rating on Alibaba with a price target of $180, highlighting the strong growth potential of the company's Qwen AI assistant [1]. - Jefferies has also maintained a Buy rating on Alibaba, setting a higher price target of $225, based on expectations that the company's Cloud business will capture a significant share of the growing AI cloud revenue market [3]. Group 2: Growth Potential and Challenges - Morgan Stanley believes that Qwen could evolve into an "all-in-one AI superapp and life assistant," which may enhance Alibaba's share price and revenue growth in its cloud business [2]. - However, the firm cautions that increased marketing expenditures to drive user adoption could result in substantial losses in other segments, estimating these losses could reach approximately CNY 7 billion in the fiscal third quarter [2]. Group 3: Industry Context - Alibaba is positioned as a major player in various sectors, including e-commerce, retail, AI, digital media and entertainment, cloud services, and technology [4]. - The growing adoption of AI and opportunities for AI agents are expected to bolster demand for Alibaba's cloud services, contributing to its market share growth anticipated by 2026 [3].