Alibaba’s cloud business has surged to the center of its growth story, prompting JPMorgan analysts to raise their outlook on both the company’s earnings and valuation. The bank’s analysts highlighted accelerating cloud revenues and stronger integration with domestic e-commerce as signs that Alibaba is repositioning itself as a leader rather than a laggard in China’s internet sector.
Over the past quarter, Alibaba’s performance outpaced the KraneShares CSI China Internet ETF by more than 360 percentage points, a sharp turnaround fueled by momentum in food delivery, quick commerce, and, most notably, AliCloud. Analysts attending the company’s Apsara conference in Hangzhou said the event underscored how cloud computing is becoming a core driver of Alibaba’s future, with external customers increasingly contributing to revenue streams once dominated by its own platforms.
AliCloud’s revenue was up 26 percent year over year in the second quarter of 2025, marking its growth record of eight consecutive quarters. Much of this expansion stems from soaring demand for generative AI, particularly in industries like autonomous driving, internet services, and embodied intelligence. JPMorgan projects that adoption of generative AI in China could exceed the pace of earlier SaaS adoption, as companies transition from experimental pilots to fully automated workflows in marketing, customer service, finance, programming, and logistics within the next one to three years.
One more factor that contributes to the positive outlook is the potential synergies between Alibaba’s e-commerce ecosystem and generative AI technology. According to experts, sellers can save a part of their costs and increase conversions whereas buyers are to expect more intelligent product recommendations, lower prices and better content quality. These cost savings could then allow Alibaba to adjust its pricing strategies in categories such as ad placements and management software where it can generate higher profits from value added services.
Reflecting these dynamics, JPMorgan raised its price target for Alibaba shares to $245, up from $170, and increased forecasts for both cloud and e-commerce earnings over the next three years. The shift signals a broader change in narrative: investors no longer view Alibaba as a company losing ground but instead as one of China’s premier digital assets riding a renewed wave of technological transformation.
