阿里巴巴：AI商业化显现

RatingBuy Forecast Change AsiaChina AI commerciality becomes visible Valuation & Risks Peter Milliken, CFA Research Analyst+852-2203 6190 Incrementally better trends, and AI commentary encourages Alibaba reported 4Q revenue of RMB243bn (+3% YoY, or +11% YoY excluding theimpact from disposals of Sun Art and Intime). That represents a pick-up from the 3Q9% underlying rate. The better performance stems from improving monetization atTmall and Taobao, and an acceleration in cloud. The company led off discussionsof the quarter talking about cloud, where external revenue growth accelerated to40%,with AI related revenues continuing to grow at triple digit rates.Encouragingly, management gave guidance on how these revenues and marginsare likely to ramp up this year, with MaaS expected to reach a RMB30bn run rate byyear-end. This really highlights BABA's valuation, given that the USD65bn marketcap firm, Knowledge Atlas (2513 HK), is only set to achieve that level of revenue inmid 2029, according to Bloomberg consensus. Leo Chiang, CFAResearch Analyst+852-220-36240 An operating loss of RMB848m was recorded, down from an RMB28bn gain a yearearlier due to investments in quick commerce and AI (Qwen sits in "others", whichdropped to a RMB21bn loss in the quarter). Net profit however doubled toRMB25,476m due to mark-to-market gains on investments and disposal losses lastyear. Key highlights from the quarter include: (1) strong acceleration of cloud andAI (MaaS) revenues and margin lift ahead; and (2) better-than-expected uniteconomics improvement timeline at its quick commerce unit. China E-commerce GroupRevenue for the quarter fell 1% to RMB96,845m due to the disposals last nyear. For the quarter, the unit's EBITA fell 40% to RMB24,010m, due to thequick commerce expansion and investment in user experiences. nAIas focus.Management across the Asian e-commerce space ishighlighting efforts to integrate AI across their business, especially inregards to optimizing clicks and orders with both consumer and merchantAI overlays. Alibaba has rolled Tmall and Taobao into its Qwen app toexpand reach and provide a new experience for its shoppers, and theTaobao app has launched the Qwen Shopping Assistant, an AI agent thatprovides guidance across the shopping experience. Wukong has beenprovided to merchants. nCustomer management revenueincreased by 1% YoY in 4Q, and wouldhave risen 8% if not for the contra-revenue impact. The company is creatingan AI-based stack that moves users from an intended buy through payment 14 May 2026Software & ServicesAlibaba and delivery, with a single chat or click, that integrates search, purchase,payment and delivery. This reduces drop-out points, and lifts frequency,due to the simplicity. nQuick commercerevenue was up 57% to RMB19,988m for the quarter, aslight dip in revenue QoQ. The business continued to improve uniteconomicsand increase average order value,helped by logisticsefficiencies, order mix optimization and strong customer retention. Duringthe quarter, the company focused on increasing order size and growingnon-food categories.The company is targeting for unit economics breakeven by end-FY27,and to generate RMB1.0tn in annualized GMV on theplatform by FY28 through expansion of this business, and expects that levelof throughput will generate positive FCF. Cloud nCloud revenueexpanded by 38% YoY (+2pp QoQ) to RMB41.6b, withrevenuefrom external customers up 40%, and is expected to furtheraccelerate over the next few quarters. The growth is due to both publiccloud growth, and AI revenues more than doubled to reach RMB9bn, nowaccounting for 30% of the external revenue, and is guided to lift beyond 50%in a year. The company especially disclosed itsMaaS ARR of RMB8bnthisquarter, which largely comprises of API services on its proprietary modelslike Qwen from Bailian platform, but also AI software subscriptions and 3Pmodel take rate. The company is eying to lift that to RMB10bn in the Junequarter and RMB30bn by year-end or earlier. We think such business withnotable scale and growth has potential to lift the whole cloud valuation,given the high multiples we are seeing with AI model companies bothregionally and globally. nEBITA expanded 57% to RMB3.8bn, and margin improved to 9.1%. Thoughthe current priority is still gaining more share, themargin is likely to seemeaningful uplift to teens in the next 1-2 quarters. Drivers include 1) recentcloud products and the token price rise across the industry, 2) revenue mixshift towards MaaS which is inherently higher-margin than IaaS, 3) its full-stack offering from chips to models capturing more value across the AIchain. Earlier this year, the company has set a goal of generating overUSD100bn in cloud and AI external revenue in the next five years (or about40% CAGR) and believes this can generate 20% margins at some point. Wedidn't fully reflect that in our model, but with drivers above we think suchnarrative is more tangible now. nQwenconsume