According to a UBS research report, Alibaba (BABA, Financial) management revealed during a non-deal roadshow that the reduced cost of inference and declining chip demand have made AI more cost-effective. This development has accelerated growth opportunities for the digital transformation of Chinese businesses and small to medium enterprises. In the short term, Alibaba plans to focus more on the enterprise segment, which presents long-term profit opportunities through AI agents.
UBS indicates that there may be short-term profit margin fluctuations due to the timing differences between revenue recognition and depreciation. However, the market is likely to concentrate on Alibaba's business growth. Driven by a low base and continued platform promotion, the company's core business revenue is expected to maintain strong growth.
Despite a significant stock price increase this year, UBS maintains that Alibaba still holds value potential. The firm has reaffirmed its "buy" rating and raised its price target from $154 to $172.
