Alibaba Shares Face Divergent Pressures as Analysts Adjust Outlook

Alibaba Group finds itself navigating conflicting currents in the markets. While two major financial institutions have recently trimmed their price targets for the Chinese e-commerce giant, citing concerns over its core retail operations, a potential regulatory shift in Beijing could provide a significant boost to its cloud computing division. In pre-market trading on Friday, the company's stock declined by 2.5%.

A key development emerged from China's capital, where authorities are reportedly planning to approve imports of Nvidia's H200 AI chips within the current quarter. This news propelled Alibaba's Hong Kong-listed shares upward by as much as 4.8% during Friday's session, marking their most substantial single-day gain since November. As the largest purchaser of semiconductors among Chinese companies, Alibaba has expressed interest in acquiring over 200,000 units of the H200 processor.

Although these chips represent a previous generation of technology, U.S. export controls currently permit their sale to China, unlike more advanced processors which are restricted on national security grounds. Access to these components is viewed as critical for domestic firms like Alibaba to advance their artificial intelligence platforms and remain competitive against U.S. rivals such as OpenAI.

Investment Banks Revise Targets Amid Core Business Concerns

This positive momentum for the cloud segment contrasts with a more cautious stance from analysts covering the company's traditional commerce activities. Morgan Stanley adjusted its price objective downward from $200 to $180 per share. The firm's researchers pointed to deteriorating trends in Alibaba's principal business, noting that "e-commerce activities have worsened as Chinese consumer spending remains soft." They warned that near-term profitability could face pressure, even as they acknowledged the continuing strength of the cloud division.

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In a separate move, Jefferies also made a modest reduction to its target, lowering it from $231 to $225. Despite this adjustment, the firm continues to list Alibaba as its top pick for 2026. Analyst Thomas Chong highlighted potential in artificial intelligence, cloud computing, and the company's integrated consumer platform. According to Jefferies, cloud revenue growth is accelerating due to robust AI demand, and the quick-commerce business delivered solid progress during the December quarter.

A Company in Transition: Weighing Challenges Against Growth Engines

These opposing signals underscore Alibaba's ongoing transformation. The company's core e-commerce operations have shown signs of strain, contributing to a share price decline of more than 20% from its October peak. Investor sentiment has also been weighed down by regulatory uncertainties within the live-streaming commerce sector.

Conversely, the cloud business has emerged as a powerful growth driver, expanding by 34% year-over-year in the most recent quarterly report. The path forward appears to hinge on two factors: whether the weakness in online retail stabilizes or intensifies, and how effectively Alibaba can monetize its substantial AI investments through its cloud platform. The consensus price target among 39 covering analysts currently stands at $201. Upcoming quarterly earnings reports are expected to provide greater clarity on these pivotal issues.