Jefferies released a research report forecasting solid performance across Alibaba-W's (09988) business segments for the second fiscal quarter ended September this year.

The brokerage maintained its "Buy" rating on Alibaba, raising its Hong Kong target price from HK$184 to HK$186 and its US-listed (BABA.US) target price from US$190 to US$192.

The brokerage estimated that total revenue for the second fiscal quarter will grow 9.6% year-on-year, in line with market expectations, while AI cloud and computing power service revenue is expected to surge more than 50% year-on-year to 60.5 billion yuan, beating market expectations of 48% growth, with segment margin projected to improve to 12.3% quarter-on-quarter.

It also expects cloud revenue growth to accelerate in the third and fourth fiscal quarters, with cloud revenue growth potentially exceeding 50% year-on-year in the fiscal year ending March 2028.

The brokerage estimated that Alibaba's AI lab and applications revenue will grow 20% year-on-year to 3.6 billion yuan, with segment losses narrowing quarter-on-quarter to 10.9 billion yuan, better than market expectations of a 12.3 billion yuan loss, and expects the AI cloud and computing power services segment EBITA to offset AI lab and applications losses in the third fiscal quarter ending December this year.

On the e-commerce side, Jefferies estimated that CMR net amount will decline 5% year-on-year to 75 billion yuan, instant retail losses will narrow quarter-on-quarter to about 9.8 billion yuan, and overall EBITA is expected to reach 30.4 billion yuan, above market expectations of 26.7 billion yuan.