Alibaba Earnings Face Critical Test as AI Investments Drive Growth but Crush Profitability

Alibaba Earnings: Can AI bets power the next growth wave? - Alibaba's AI Story Faces a Big Earnings Test

Alibaba Earnings: Can AI bets power the next growth wave? 1/8 Alibaba's AI Story Faces a Big Earnings Test Alibaba heads into a closely watched earnings report on August 20, with investors looking for evidence that its aggressive push into artificial intelligence is translating into sustainable revenue and profits. The stock has rebounded sharply from its June low of around $92 to about $123, but the earnings report could determine whether that recovery has further legs. (Sources: Benzinga, Reuters, TradingKey) 2/8 Qwen AI Emerges as a Major Growth Driver Alibaba's Qwen AI models have gained significant traction, with downloads reportedly surpassing those of models from Meta and Google over the past six months. Qwen has open-sourced 460 models and generated more than 300,000 derivatives, strengthening Alibaba's position in the global AI ecosystem. 3/8 Cloud Growth Is the Bright Spot Alibaba's cloud business remains central to the AI investment story. In its March quarter, cloud revenue jumped 38% year-on-year, while overall revenue rose 3% to $35.2 billion. China e-commerce revenue increased 1%, while international digital commerce revenue grew 5%, highlighting the stronger momentum coming from cloud and AI-related operations. 4/8 AI Investment Is Hitting Profits The major concern is profitability. Despite growth across key businesses, Alibaba's operating profit plunged 84% in the March quarter as the company stepped up spending on AI. For the upcoming quarter, analysts cited by Benzinga expect revenue to rise 8.35% to about $39.74 billion, while EPS could fall to around $1.48 from $2. 5/8 Wall Street Still Sees Big Upside Analyst sentiment remains broadly positive despite the earnings risks. Susquehanna raised its price target to $185, Barclays increased its target to $195 and JPMorgan lifted its target to $205. TipRanks says Alibaba retains a Strong Buy consensus, with 12 Buy ratings and an average price target of $190.76. 6/8 Lawsuit Adds Another Risk Alibaba is also facing a federal securities class-action lawsuit alleging investors were misled about risks linked to U.S. restrictions involving Chinese military companies and allegations surrounding unauthorized access to Anthropic's Claude AI model. The legal overhang adds another layer of uncertainty as investors assess Alibaba's AI ambitions and regulatory exposure. 7/8 Stock Momentum Has Started to Cool Technical indicators suggest the recent rally is losing some momentum. JournalArta reported Alibaba shares down 1.64% in the latest session, with MACD weakening and trading volume running below its 20-period average. HKD 110 is identified as key support, while HKD 128.10 is the first major resistance. 8/8 The Key Question: Can AI Deliver Profits? Alibaba's earnings will be less about headline revenue growth and more about whether AI and cloud investments can eventually generate higher-margin, recurring revenue. Strong Qwen adoption and cloud growth provide the bullish case, while falling profits, heavy investment and legal risks remain the key concerns. The earnings report could therefore decide whether Alibaba's AI-driven rebound is the start of a longer-term rerating or another short-lived rally.

Alibaba Earnings Preview: AI Model Downloads Surge, Passing Meta, Google - Alibaba Gr Hldgs (NYSE:BABA)

Alibaba Group (NYSE:BABA) stock has rebounded in the past two months, moving from the June low of $92 to $123 today. This rally will be put to the test this week when it releases its quarterly earnings. Alibaba Earnings Come as AI Growth Continues The upcoming BABA earnings come at a time when it has become one of the biggest players in the AI industry. A recent report showed that its AI models downloads have surged in the last six months, eclipsing those made by Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG). They have become the biggest AI models in the world, with Qwen having open-sourced 460 models. Its models have also spawned over 300,000 derivatives. Alibaba's models have become popular after Apple (NASDAQ:BABA) started using its models in the Chinese market. According to Reuters, Apple has now shifted to training its own AI models for the Chinese market through a partnership with Alibaba. Markets Elon Musk Eyes Trillionaire Status Again as SpaceX Stock Rebounds 3 min read Elon Musk's net worth has soared recently and is slowly eying the trillionaire status as SpaceX stock bounces back Read article Therefore, the upcoming Alibaba earnings will provide more color on whether this AI growth is translating to revenues and profits. Its most recent results showed that, while its business was growing, its AI-associated costs were affecting its profitability. Latest Private Market Opportunities Join 400,000+ Investors Revenue rose by 3% in its March quarter to $35.2 billion, with its cloud business leading the charge with a 38% YoY growth. Its China e-commerce group revenue rose by 1% to $10.58 billion, while its international digital commerce group rose by 5% to $4.19 billion. Despite this growth, its operating profit dropped by 84% because of its AI investments. Benzinga data shows that analysts expect this week's results to show that its revenue rose by 8.35% to $39.74 billion, with earnings per share falling from $2 to $1.48. Analysts are optimistic about the BABA stock price. Susquehanna boosted its outlook from $170 to $185, while Barclays hiked from $186 to $195. Similarly, JPMorgan hiked the target from $200 to $205, citing its positioning in the AI industry. Alibaba Stock Technical Analysis The daily chart shows that the BABA stock price has jumped from the year-to-date low of $92.15 in June to the current $123.8. It has formed an ascending channel, and is now near the lower side. It also remains slightly above the 50-day Exponential Moving Average (EMA). The stock has moved above the strong, pivot, reverse level of the Murrey Math Lines. These technicals, and the underlying trend, suggest that the stock will continue rising after earnings, with the next target being the strong pivot release level of $137.5, which aligns with the upper side of the ascending channel. Markets SCHD, DIVB Beat QQQ, VOO and SPY as Dividend ETFs Ride AI Hedging Wave 3 min read The SCHD and DIVB ETFs are doing well this year and are beating their counterparts like VOO, SPY, and QQQ as investors hedge AI Read article Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.