Jefferies has issued a research report indicating that the acceleration trend in Alibaba-W's (09988) cloud business is set to persist, leading the firm to reaffirm its "Buy" rating. The Hong Kong-listed target price has been increased from HK$179 to HK$184, while the US-listed target price for Alibaba (BABA.US) has been raised from $185 to $190.

According to Jefferies, Alibaba-W posted a 9% year-on-year revenue increase for the first fiscal quarter ending June 30, aligning with both market consensus and the firm's projections. Adjusted EBITA came in at RMB 27.3 billion, reflecting a 30% year-on-year decline, yet this figure surpassed the market's RMB 25.6 billion estimate and Jefferies' own RMB 26.2 billion forecast.

Management has guided for continued sequential acceleration in cloud revenue growth over the coming quarters, with AI-related products expected to approach US$10 billion in annual recurring revenue (ARR) by the next fiscal quarter. The payback period for AI computing investments is currently estimated at roughly three years, though management noted this could compress to 2.5 years through a combination of optimized product mix, broader adoption of self-developed T-Head chips, and diversified monetization strategies.

Management also disclosed that T-Head's proprietary chips have achieved widespread commercial deployment, with the latest generation, the Zhenwu M890, now being utilized by over 650 external customers spanning more than 20 industries—including internet, autonomous driving, and financial services—through Alibaba Cloud services.