Morgan Stanley lowered its price target for Alibaba Group Holding Ltd. to $180 from $190, but the investment bank kept the Chinese e-commerce giant as a 'top pick' among its coverage. The new target still implies a roughly 60% upside from Alibaba's recent closing price of $112.14.
Why analysts are trimming targets
The revision follows similar moves by other major banks. HSBC cut its target to $170 from $176, maintaining a buy rating. Daiwa went further, slashing its target to $175 from $200 in late June, citing weak sales during China's 618 shopping festival. The mid-year event, once a blockbuster for Alibaba, showed softer consumer spending this year.
Morgan Stanley analyst Gary Yu said he expects Alibaba to gain share in the AI cycle, pointing to the company's large cloud infrastructure in China. He also highlighted cash generation, dividends, and share buybacks as factors supporting the stock. The online regulatory environment in China appears to be easing, which could further benefit Alibaba's core commerce and cloud businesses.
AliExpress hit with €550 million EU fine
On July 20, the European Commission fined Alibaba's cross-border marketplace AliExpress €550 million for breaching the Digital Services Act. AliExpress called the penalty disproportionate and has until October 20 to submit an action plan addressing the regulator's concerns. The fine adds a layer of regulatory risk in Europe, even as China's own oversight loosens.
Stock still far from 52-week high
Alibaba shares have climbed about 18% over the past month, recovering some ground after a prolonged slump. But they remain well below the 52-week high of $192.67, reached in late 2023. The stock has been under pressure from a sluggish Chinese economy, regulatory crackdowns, and competition from rivals like PDD Holdings and JD.com.
What to watch in late August
Investors are now looking ahead to Alibaba's earnings report due in late August. The results will test whether the cloud growth that Morgan Stanley and others are betting on is actually materializing. Alibaba's cloud division has been a key focus as the company pivots toward AI and enterprise services. The company also faces a deadline: AliExpress must file its action plan with the European Commission by October 20, or risk further penalties.
