Key points from Alibaba's Q2 2026 (September Quarter 2025) earnings call transcript.

Here is a summary of the key points from Alibaba's Q2 2026 (September Quarter 2025) earnings call transcript.

Executive Summary

Alibaba reported a quarter of strong revenue growth driven by its Cloud AI and commerce businesses, but this came at the cost of significantly lower profitability and negative free cash flow due to aggressive strategic investments. The company is firmly in a high-investment phase to secure long-term market leadership in AI and instant commerce.

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1. Key Financial Highlights

• Revenue: Total revenue was RMB 247.8 billion. On a like-for-like basis (excluding disposed businesses), revenue grew 15% year-over-year (YoY).

• Profitability: Profitability metrics declined sharply due to investments.

  • Adjusted EBITDA decreased by 78% YoY.

  • GAAP Net Income was RMB 20.6 billion, down 53% YoY.

• Cash Flow: Free Cash Flow was an outflow of RMB 21.8 billion, a significant shift from positive cash flow a year ago, driven by investments in cloud infrastructure and quick commerce.

• Balance Sheet: The company remains well-funded with a strong net cash position of $41 billion to support its strategy.

2. Business Segment Performance

A. Cloud Intelligence Group: The Star Performer

• Revenue accelerated, growing 34% YoY. Revenue from external customers grew 29%.

• AI-related revenue grew triple-digits YoY for the 9th consecutive quarter and now accounts for over 20% of external cloud revenue.

• Management stated that AI server capacity cannot keep up with customer demand, and order backlogs are growing.

• Claimed leadership in China's AI cloud market with a share larger than the 2nd to 4th players combined.

B. China Commerce Group: Investing for Growth

• Revenue grew 16% YoY to RMB 132.6 billion.

• Customer Management Revenue (CMR), a key metric for core e-commerce, grew 10% YoY.

• Quick Commerce (e.g., instant retail and delivery) was a major focus:

  • Revenue grew 60% YoY.

  • The business significantly improved its unit economics, with per-order losses cut by 50% since July-August.

  • It is successfully driving user engagement and GMV for the broader Taobao platform.

  • Goal is to generate CNY 1 trillion in GMV for the platform within three years.

3. Strategic Focus & Outlook

Management repeatedly emphasized two core strategic pillars:

1. "AI+ Cloud": The company is aggressively investing to be a full-stack AI leader.

   • They are building out AI infrastructure, foundation models (like Qwen), and consumer AI apps (the Qwen app had 10 million downloads in its first week).

   • The RMB 380 billion three-year CapEx plan may be increased, as management indicated it might be on the "low side" given the overwhelming customer demand they see.

2. "Consumption": Deepening its presence in the Chinese consumption market.

   • The primary current lever is Quick Commerce, which is seen as essential for user growth and platform synergy.

   • Future efforts will focus on integrating existing businesses (like Freshippo, Fliggy, Amap) to create a more cohesive ecosystem.

Conclusion

Alibaba is sacrificing short-term financial metrics to fund massive investments in what it believes are the two key drivers of its future: AI/Cloud technology and instant commerce. The company is betting that its current spending on infrastructure and market share will secure its long-term leadership and generate substantial returns in the coming years.

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The consensus 12-month price target for Alibaba's Hong Kong stock (9988.HK) is approximately HK$197.74, with a high estimate of HK$261.24 and a low estimate of HK$120.46. This reflects a potential upside of about 25% from the current price, according to analyst forecasts. 

Consensus estimate price breakdown:

• Average: HK$197.74
• High: HK$261.24
• Low: HK$120.46 

Important considerations:

• This data is based on 12-month price targets from various analysts and can fluctuate.
• The consensus recommendation for the stock is a "Strong Buy" based on the average analyst rating.
• Analyst price targets are opinions and should not be considered investment advice. They do not take into account individual investment objectives or financial circumstances. 

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The consensus estimate average target price for Alibaba Group Holding Ltd. (9988.HK) is approximately HK$198 to HK$206. Analysts generally have a "Strong Buy" or "Buy" rating for the stock. 

As of November 25, 2025, the stock's current price is around HK$157.80. The average price targets suggest a significant potential upside from the current trading price. 

Analyst price targets and ratings include:

• Average Price Target: Ranges from approximately HK$197.74 to HK$205.89 across different financial sources.
• High Forecast: The highest analyst estimate reaches around HK$261.58.
• Low Forecast: The lowest analyst estimate is approximately HK$120.62.
• Consensus Rating: The overall consensus recommendation from analysts is a "Strong Buy" or "Buy". 

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November 25, 2025, the stock's current price is around HK$157.80