Morgan Stanley kept Alibaba (BABA) stock as a “top pick” ahead of late-August earnings. Analyst Gary Yu made the call over two weeks after cutting his target to $180 from $190.
That target sits roughly 60% above where BABA shares closed on Friday at $112.14. Thus, Wall Street is telling clients the stock is worth far more than buyers are currently willing to pay.
Why the Target Cut Came First
Yu lowered his Alibaba target in early July. He still kept an overweight rating on the stock.
Other banks pivoted in the same direction. HSBC cut its target to $170 from $176 in July. The bank still maintained its buy rating.
Daiwa moved earlier, cutting to $175 from $200 on June 24. The firm pointed to weak sales during China’s 618 shopping festival.
Follow us on X to get the latest news as it happens
What Yu Wants Investors to Watch
Yu framed the reiteration by pointing to Alibaba’s cloud infrastructure, which he described as the largest in China.
“We expect Alibaba, having the largest cloud infrastructure in China, to win share in the current evolutionary AI cycle in China,” Yu said.
The bank also cited cash generation, dividends, and share buybacks as support. Morgan Stanley noted the online regulatory environment appears to be easing, with Alibaba positioned to benefit.
Yet, the bullish calls sit against a run of bad news. The European Commission fined AliExpress 550 million euros on July 20 for breaching the Digital Services Act (DSA).
AliExpress called the fine disproportionate and has until October 20 to file an action plan.
Meanwhile, Alibaba shares have gained about 18% over the past month. They remain well below their 52-week high of $192.67.
The late-August report will test whether the cloud growth Yu describes arrives fast enough to close a 60% gap.
Subscribe to our YouTube channel to watch leaders and journalists provide expert insights
