BABA
Earnings day, but make it messy
Alibaba just turned in one of those quarters that gives investors whiplash. Revenue came in at $39.64 billion, up 9% year over year and ahead of expectations — nice. But adjusted EPS fell 42% to $1.26, badly missing the $1.85 consensus, and net income took a brutal 75% dive.
The AI story is doing a lot of heavy lifting
If you’re wondering what management wants you to focus on, it’s AI. CEO Eddie Wu said Alibaba Cloud’s external revenue growth accelerated to 45%, with AI-related product revenue posting triple-digit growth for the twelfth straight quarter. That’s the kind of line companies use when they want to remind you they’re not just a legacy e-commerce giant wearing a cloud costume.
Wall Street did the polite shrug
The stock dropped 8.4% to $119.62, and then the analysts came out with their little forecast edits:
- Baird kept an Outperform rating and trimmed its target from $164 to $160
- Barclays kept Overweight and lifted its target from $195 to $200
- JP Morgan kept Overweight and raised its target from $205 to $210
So the verdict is basically: the quarter was messy, but the AI/cloud narrative is still strong enough to keep the bulls caffeinated.
Big picture
For investors, this is the classic Alibaba paradox: the core business can disappoint while the AI/cloud story keeps getting louder. If the market believes that growth engine is real, the stock can recover. If not, you’re left staring at the profit line and wondering where the nice part went.