Orient Securities released a research report stating that BABA-W (09988) continues to accelerate quarter-over-quarter, driven by Alibaba Cloud's AI advancements and faster overseas cloud expansion. The core e-commerce platform benefits from synergies with food delivery and meta-logic development, sustaining steady growth. While investments in flash sales increased this quarter, the segment has entered a phase of reducing losses. AI's deepening integration across multiple business lines highlights the company's growth potential under AI-driven strategies, warranting a target price of HK$204.79 and a maintained "Buy" rating.

For e-commerce, the bank forecasts FY26Q2 revenue of RMB127.18 billion (YoY +9.0%). Driven by Taobao's flash sales, user growth and retention on the main platform are expected to lift GMV by 7% YoY, stabilizing its share of online retail sales. Customer management revenue (CMR) is projected to rise 10% YoY, with flash sales contributing 2-3% of this growth, partly due to higher penetration of AI-powered ad products like "Whole Site Push" and algorithm upgrades boosting ad TR. Although CMR may face slight pressure next quarter due to normalized commission rates, synergies from flash sales and AI ad products are expected to sustain high single-digit CMR growth. In August, Taobao launched an AI shopping assistant, "AI Omni-Search," enhancing ad placements and potentially improving conversion rates through personalized recommendations. The bank remains optimistic about Taobao's meta-logic evolution—AI-driven user retention and conversion rates fueling ad TR growth—with further upside for main platform ad TR.

In instant retail, the bank estimates FY26Q2 losses exceeding RMB35 billion, with per-order losses around RMB5. Q3's peak summer season saw aggressive order pushes, with daily orders stabilizing at 80 million in August and peaking at over 100 million. However, food delivery subsidies were scaled back starting September, likely reducing per-order losses to RMB2-3 in FY26Q3. The company prioritizes market share while focusing on sustainable growth, balancing subsidies and flash sales structure with scale and operational efficiency improvements. Mid-to-long-term losses are expected to narrow further as flash sales unit economics improve.