Guosen Securities has issued a research report maintaining an "outperform" rating on BABA-W (09988). The company continues to invest in two major strategic opportunities: an AI+cloud-centric technology platform and a comprehensive consumer platform that integrates shopping and lifestyle services.

The firm forecasts the company's revenue for fiscal years 2026-2028 at 1,064.3 billion yuan, 1,181.7 billion yuan, and 1,286.6 billion yuan respectively, compared to previous estimates of 1,063.9 billion yuan, 1,184.4 billion yuan, and 1,297.2 billion yuan, essentially unchanged. Adjusted net profit is projected at 126.6 billion yuan, 167.0 billion yuan, and 193.8 billion yuan, representing adjustments of -6%/0%/0%, primarily considering higher investment levels in fiscal 2026.

The report states that after multiple rounds of organizational and management adjustments, Alibaba's management team has gradually stabilized and clarified its strategic goals for consumer services and AI+cloud. Since 2021, Alibaba has continuously adjusted its organizational structure and senior management, and has now stabilized with Tsai Chong-hsin, Wu Yongming, and Jiang Fan at the core. The business strategy is clear, with group operations being reorganized into four major segments starting in fiscal 2026, focusing on intensive investment in an "AI+cloud"-centric technology platform and a comprehensive consumer platform that "integrates shopping and lifestyle services," adopting a youthful mindset to embark on "entrepreneurial restart."

**E-commerce Business**: GMV growth as core focus, pursuing stable market share, continuing to maintain monetization rate improvement in the short term.

1) GMV: The current e-commerce competitive environment remains intense. Since Wu Yongming became Alibaba's CEO in 2023, the core e-commerce business (Taobao Tmall) has shifted to prioritize GMV growth, gradually abandoning low-price strategies. After Jiang Fan's return, he further proposed measures to support quality brands and continue expanding external traffic. The firm believes the company can maintain growth levels close to the overall market.

2) Take rate: The firm believes that with platform-wide product and technical service fees and synergistic effects from instant retail, the company can maintain a year-over-year monetization rate improvement trend in the short term, driving CMR to achieve approximately 10% growth.

3) Profit side: Due to the intense competitive e-commerce environment, the company has experienced declining profit margins for consecutive quarters. The firm believes the company still needs to provide subsidies to merchants and users in e-commerce business to achieve the top priority goal of GMV growth, so profit margins may continue to decline.

**Instant Retail**: Short-term investment creates profit pressure; focus needed on e-commerce synergies and UE optimization pace, with long-term potential to contribute over 1 trillion yuan in GMV.

According to the firm's calculations, the instant retail market could exceed 3 trillion yuan by 2030, accounting for over 16% of the overall e-commerce market. Therefore, Alibaba needs to actively deploy to ultimately achieve its goal of covering consumers' full-scenario shopping needs. Although in the short term, the firm estimates instant retail may bring over 70 billion yuan in losses to Alibaba in fiscal 2026, it can enhance the company's retail market share and competitiveness in the medium to long term, with potential to contribute over 1 trillion yuan in GMV. How the company will enhance synergies between instant retail and e-commerce business, and how it will optimize UE in terms of user structure, order structure, and fulfillment efficiency, deserves attention.

**Cloud Business**: The global cloud market scale is approximately $820 billion in 2024, with China's public cloud accounting for about 5.6%. Driven by rapid development of AI and large models, overseas cloud vendors have strong and sustained demand, with computing power in short supply. Giants like Amazon, Microsoft, and Google continue to increase capital expenditure and compete for cloud computing market share, with revenue continuously accelerating. Cloud business has an excellent business model with scale effects and stable cash flow, and AI will further promote cloudification and digitalization, drive demand for traditional modules, and improve profit margins.

Domestically, with the emergence of Deepseek this year, cloud demand has similarly triggered sustained growth. As the pioneer and leader in domestic cloud services, Alibaba Cloud occupies about one-third of the domestic market share, with revenue accelerating quarter by quarter. Unlike traditional cloud services, the AI era requires higher product richness than before, so cloud computing market concentration will continue to increase, with leaders expected to benefit significantly. Additionally, the company currently has extensive AI model and application layouts, with the Qwen series models leading domestic models, and the application side actively promoting AI transformation of core products like Taobao, Quark, DingTalk, and AutoNavi, achieving comprehensive coverage of B2B and B2C scenarios.