Alibaba's (BABA) cloud growth momentum is likely to sustain in the upcoming quarters and margin to remain intact as artificial intelligence-related revenue continues to grow at triple digits, Morgan Stanley said in a Wednesday research report.

Cloud margin expansion is driven by price hikes and rising model-as-a-service revenue mix, and is on track to deliver long-term target of 20%, analysts wrote.

Customer management revenue is growing in line with the industry, and costs related to Qwen model training is likely to be sizable alongside the token surge, according to the note.

The brokerage said it reiterated its overweight rating on the stock and adjusted its price target to $180 per share from $190.

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