Nomura has released a research report stating that it expects Alibaba (09988) (BABA.US) to further demonstrate its artificial intelligence (AI) strategic positioning in its upcoming second fiscal quarter of fiscal year 2027.

The bank has raised its adjusted net profit forecast for Alibaba's fiscal year 2027 by 7%, mainly driven by improved profitability expectations in its e-commerce business.

The bank has assigned a "Buy" investment rating and a target price of US$178 to Alibaba.

Nomura noted that Alibaba is further focusing on AI and cloud businesses. After attending Alibaba's annual Apsara Conference, the bank has greater confidence in the prospects of its AI cloud business.

Within China's AI ecosystem, few companies can hold such a solid advantageous position across nearly every key link of the AI value chain — covering chips, infrastructure, models, and AI applications — as Alibaba does.

Nomura's exchanges with Alibaba further confirmed its view: management has shifted its focus toward the AI cloud business, which is gradually becoming an important engine for revenue growth; at the same time, the company is placing greater emphasis on the profitability of its other business segments, aiming to reserve cash flow for investments in the AI sector.