CMSC International released a research report reaffirming BABA-W (09988) as its top pick with a "Buy" rating, citing the company's strong execution capabilities, business synergies, and AI leadership through its comprehensive technology product ecosystem. Alibaba recently launched its flagship AI application "Qianwen APP," positioned as the "official AI assistant powered by Alibaba's most advanced large model." The app features conversational Q&A, smart writing, and multimodal camera functions. Compared to ChatGPT's third-party integration model, CMSC believes Alibaba's in-house full-stack product ecosystem and free-tier strategy provide competitive advantages, though short-term focus should be on daily active user (DAU) growth.

Citing Omdia data, CMSC noted that China's AI cloud market reached RMB 22.3 billion in the first half of the year, with Alibaba leading at a 35.8% market share. The firm expects Alibaba's new consumer-facing initiatives to drive long-term revenue growth and maintains a sum-of-the-parts (SOTP) target price of $204 for BABA.US, implying a 21x P/E ratio for FY2027. Alibaba is set to report Q2 FY2026 results on November 25.

CMSC forecasts group revenue growth accelerating to 3.6% YoY, driven primarily by incremental contributions from on-demand retail. Customer management revenue (CMR) is expected to grow 10% YoY, similar to the previous quarter, while on-demand retail revenue is projected to surge 83% YoY to RMB 26.9 billion. Cloud and international e-commerce businesses are anticipated to maintain robust growth at 26% and 19% YoY, respectively. However, adjusted EBITA is expected to decline 61% YoY to RMB 15.9 billion, with non-GAAP net profit falling 54% YoY to RMB 16.8 billion.