---
endpoint: analytics
pattern: Internet
status: done
latency_ms: 176362
conversation_id: 378ced22-9181-43d2-90ad-c686e71c4d67
citations: 0
created: 2026-05-31 18:29:33Z
---

# Is CLSA incrementally more positive/negative on Alibaba. If so, why?

## CLSA on Alibaba: Yes — Incrementally More Positive

**Bottom line:** CLSA has turned **incrementally more positive** on Alibaba (BABA US / 9988 HK) over the past four months. The decisive shift came on **20 February 2025**, when lead analyst Elinor Leung upgraded the stock from **Outperform (O-PF) to High-Conviction Outperform (HC O-PF)** and lifted the SOTP-based target price from **US$125 → US$165** (+32%). This stance has been **reiterated at the May 15 Mar-Q update**, with TP unchanged at US$165 and the High-Conviction tag retained.

### Rating / TP evolution

| Date | Note | Rating | Target Price | Trigger |
|------|------|--------|--------------|---------|
| 22 Jan 2025 | Improved growth (Dec-Q preview) | O-PF (retained) | US$125 | Dec-Q rebound expected; no upgrade yet [1] |
| 20 Feb 2025 | CMR and Cloud accelerated growth (Dec-Q result) | **HC O-PF (UPGRADE)** | **US$165** | Dec-Q beat; cloud reacceleration [2][3] |
| 15 May 2025 | Solid TTG growth (Mar-Q result) | HC O-PF (reiterated) | US$165 | Mar-Q beat; AliCloud +18% YoY [5][7] |

### Why CLSA turned more positive — three core drivers

**1. Cloud reacceleration powered by AI demand (the headline catalyst)**

This is the single biggest swing factor in CLSA's thesis. In the Jan 22 preview, CLSA expected AliCloud to grow ~12-15% YoY with "stable" margins [1]. By Feb 20, the message was sharply more bullish:

- Dec-Q AliCloud revenue +13% YoY to Rmb31.7bn, cloud margin **9.9% (+1.5ppt YoY)** [4]
- **AI-product revenue posting triple-digit YoY growth for the 6th consecutive quarter** [4]
- Management guided that **capex over the next 3 years will exceed the cumulative capex of the past decade (~Rmb350bn)** — implying >Rmb120bn/yr in FY26-28 [4]
- CLSA raised its forward cloud growth assumption from **15% to +20% for the next three years** [3]

By May 15 (Mar-Q result), AliCloud accelerated further to **+18% YoY (Rmb30.1bn)**, with **adj EBITA up 69% YoY to Rmb2.4bn** — AI inference revenue is now "a bigger revenue driver especially among new customers" [6].

**2. Taobao-Tmall (TTG) CMR turnaround — earlier and stronger than expected**

- Dec-Q CMR accelerated to **+9% YoY** (vs CLSA's pre-result expectation of mid-single digit) [2]
- Mar-Q CMR accelerated *further* to **+11.8% YoY** to Rmb71.1bn, 3.1% above CLSA's estimate, on take-rate expansion (software service fee + Quanzhantui adoption) [5]
- CLSA now models **~10% TTG CMR growth in FY26**, with Taobao-Tmall's profit "resuming positive growth with +40% margin in the coming quarters" [7]

**3. Earnings and valuation re-rating**

- CLSA raised FY25/26/27CL adj net profit by **+3% / +8% / +9%** at the Feb upgrade [3]
- Raised FY26CL revenue / adj EBITDA by **+0.5% / +5.3%** in May on continued take-rate expansion [5]
- TP build (US$165): SOTP using DCF for core (US$359bn at 12.4% WACC, 1% terminal growth), 5x FY27 P/S for AliCloud, plus 33% of Ant Group's US$112bn valuation (60% IPO discount) [8]
- Valuation framing has flipped — stock trades at **~12x FY27CL adj PE**, which CLSA argues "mainly reflects ecommerce valuation and net cash, with the cloud segment a free option" [7]

### What still keeps CLSA cautious (the marginal negatives)

- **Instant commerce subsidies** flagged as a near-term profit drag — TTG raising instant-commerce investment may pressure FY26 profit, though adj EBITA could still grow teens-% [5]
- **Local services losses widening QoQ** due to subsidies amid intensified industry competition [9]
- **International commerce (AIDC) slowing** to ~17% YoY in Jun-Q (vs prior +30%+ pace) as the company adopts a "more prudent strategy amid geopolitical uncertainties" and shifts emphasis to profitability [9]
- AIDC Jun-Q losses may temporarily widen; AIDC quarterly breakeven pushed to FY26 [5]

### Synthesis

CLSA's positivity is **specifically anchored in the AI/cloud thesis**, not a broad China-consumption call. The Feb upgrade was triggered by Dec-Q evidence that (a) AI inference demand is real and scaling (60-70% of new compute demand) and (b) the cloud margin recovery (+1.5ppt YoY) validates the capacity ramp. The May reiteration confirmed both vectors held into Mar-Q with cloud growth *re-accelerating* to 18% YoY and adj EBITA up 69% YoY. The TTG take-rate story is the supporting leg, while geopolitical caution on AIDC and instant-commerce subsidy spend are the two countervailing concerns CLSA explicitly flags.

**Coverage attribution:** All notes are authored by **Elinor Leung, CFA** (lead) with Leo You, Wenting Yu and Chelsey Liu under the **CLSA** publisher — this is CLSA-parent China Internet coverage, not CLST (Taiwan).

---
**Sources**
[1] Alibaba - O-PF (Improved growth) — CLSA, Elinor Leung et al. (22 Jan 2025) — 607948779LinqAlpha.PDF
[2] Alibaba - HC O-PF (CMR and Cloud accelerated growth) — CLSA (20 Feb 2025) — 607951236LinqAlpha.PDF
[3] Alibaba - HC O-PF: Upgrade to High Conviction O-PF with higher TP of US$165 — CLSA (20 Feb 2025) — 607951236LinqAlpha.PDF
[4] Alibaba - HC O-PF: AliCloud resumed double-digit growth on strong AI product demand — CLSA (20 Feb 2025) — 607951236LinqAlpha.PDF
[5] Alibaba - HC O-PF (Solid TTG growth) — CLSA (15 May 2025) — 607959625LinqAlpha.PDF
[6] Alibaba - HC O-PF: Cloud Intelligence Group accelerated growth driven by AI demand — CLSA (15 May 2025) — 607959625LinqAlpha.PDF
[7] Alibaba - HC O-PF: Reiterate High-Conviction Outperform with unchanged US$165 TP — CLSA (15 May 2025) — 607959625LinqAlpha.PDF
[8] Alibaba - HC O-PF: SOTP-derived target price US$125 → US$165 — CLSA (20 Feb 2025) — 607951236LinqAlpha.PDF
[9] Alibaba - HC O-PF: International retail commerce will likely slow to 17% YoY growth — CLSA (15 May 2025) — 607959625LinqAlpha.PDF

