Alibaba Group (NYSE:BABA) stock has rebounded in the past two months, moving from the June low of $92 to $123 today. This rally will be put to the test this week when it releases its quarterly earnings.
Alibaba Earnings Come as AI Growth Continues
The upcoming BABA earnings come at a time when it has become one of the biggest players in the AI industry. A recent report showed that its AI models downloads have surged in the last six months, eclipsing those made by Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG).
They have become the biggest AI models in the world, with Qwen having open-sourced 460 models. Its models have also spawned over 300,000 derivatives.
Alibaba’s models have become popular after Apple (NASDAQ:BABA) started using its models in the Chinese market. According to Reuters, Apple has now shifted to training its own AI models for the Chinese market through a partnership with Alibaba.
Therefore, the upcoming Alibaba earnings will provide more color on whether this AI growth is translating to revenues and profits. Its most recent results showed that, while its business was growing, its AI-associated costs were affecting its profitability.
Revenue rose by 3% in its March quarter to $35.2 billion, with its cloud business leading the charge with a 38% YoY growth. Its China e-commerce group revenue rose by 1% to $10.58 billion, while its international digital commerce group rose by 5% to $4.19 billion. Despite this growth, its operating profit dropped by 84% because of its AI investments.
Benzinga data shows that analysts expect this week’s results to show that its revenue rose by 8.35% to $39.74 billion, with earnings per share falling from $2 to $1.48.
Analysts are optimistic about the BABA stock price. Susquehanna boosted its outlook from $170 to $185, while Barclays hiked from $186 to $195. Similarly, JPMorgan hiked the target from $200 to $205, citing its positioning in the AI industry.
Alibaba Stock Technical Analysis
The daily chart shows that the BABA stock price has jumped from the year-to-date low of $92.15 in June to the current $123.8. It has formed an ascending channel, and is now near the lower side. It also remains slightly above the 50-day Exponential Moving Average (EMA).
The stock has moved above the strong, pivot, reverse level of the Murrey Math Lines. These technicals, and the underlying trend, suggest that the stock will continue rising after earnings, with the next target being the strong pivot release level of $137.5, which aligns with the upper side of the ascending channel.
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