HSBC: Alibaba Cloud's profitability is expected to improve significantly in the next two quarters

According to Golden Ten Data on May 14, HSBC Holdings analysts stated in a research report that Alibaba's cloud business profitability is expected to improve significantly over the next two quarters. The analysts pointed out that the deployment of self-developed chips and the transformation of the business structure towards higher-margin segments are expected to support the increase in Alibaba Cloud's profit margins. Based on improved margins, HSBC raised its EBITA forecasts for Alibaba's cloud business for fiscal years 2027 to 2028 by 40% to 50%. The report also mentioned that this could boost market expectations for Alibaba Cloud's valuation. HSBC maintains a "Buy" rating on Alibaba and raised its ADR target price from $172 to $180.