Alibaba Group Holding’s adjusted EBITA declined 78% sequentially in the September quarter. Cloud revenue growth is expected to be “high” instead of “accelerating” in the coming quarters, while customer management revenue growth will decelerate in the December quarter. Adjusted EBITA missed estimates due to higher quick commerce losses and increased investment in AI applications.

Alibaba’s reluctance to guide accelerated cloud revenue growth is due to supply constraints and quarterly fluctuations in internal AI cloud usage. Despite this, demand for AI is increasing, and guided capital expenditure may be too conservative. The company’s fair value estimate remains at $258 per ADS, signaling undervaluation and strong execution capabilities in the cloud business.

Alibaba successfully halved quick commerce unit economics losses by October and maintained order volume share. Third-party data supports a bullish outlook on Alibaba’s AI cloud, with over 180,000 derivative models developed based on Qwen as of Oct. 31. This indicates a strong position in the AI cloud market.

Read more at Morningstar: Alibaba Earnings: Quick Commerce Loss Disappoints; Long-Term Positive Outlook Maintained