Morgan Stanley, Jefferies Lower Alibaba Price Targets Amid Growth Concerns

Morgan Stanley reduced its price target for Alibaba (BABA) to $108 from $135, citing persistent challenges in core commerce growth and slower-than-expected recovery in the domestic e-commerce market. The firm maintained an 'underweight' rating, highlighting continued pressure on advertising revenue and margin expansion. Jefferies followed suit, cutting its target to $105 from $125, emphasizing weaker-than-expected consumer spending trends and increased competition in cloud infrastructure. Both firms noted that Alibaba’s recent strategic shifts, including restructuring and investment in AI-driven services, may take longer to yield returns than anticipated. The revisions come amid broader investor scrutiny of Chinese equities, particularly technology stocks facing regulatory and macroeconomic uncertainties. Alibaba’s Q4 2025 revenue rose 4% year-over-year to RMB 228.4 billion, but growth in core commerce was below expectations at 3.2%, signaling continued softness in user engagement and transaction volume. Cloud revenue grew 10% year-over-year, though margins declined due to higher infrastructure spending. The downward revisions have influenced market sentiment, with BABA shares falling 3.4% in after-hours trading on the news. Analysts across Wall Street are now adjusting their models to account for slower user monetization and reduced capital efficiency. The moves underscore growing skepticism about Alibaba’s ability to deliver sustained top-line momentum in a tighter economic environment. Investors and institutional holders are closely monitoring the company’s upcoming earnings release in March 2026, where management is expected to provide updated guidance on cloud profitability, international expansion, and AI integration timelines.