Alibaba's China Discount Comes With Competitive Forward Growth (Rating Upgrade)

Alibaba Group Holding Limited is upgraded to Buy, targeting $180 (22.5x $8 EPS), offering nearly 30% upside if profitability and China discount ease. BABA is pivoting from traditional China value to an AI/cloud growth platform, with heavy strategic investment depressing current earnings and free cash flow. Cloud segment is the clearest return pool, with revenue up 38% and EBITA up 57% year-over-year, while broader capex focuses on AI, user acquisition, and experience.