Alibaba has secured highly anticipated U.S. government approval to purchase Nvidia’s cutting-edge H200 AI accelerators, a regulatory milestone that analysts estimate could unlock up to $20 billion in revenue by significantly scaling the company's artificial intelligence capabilities.
The technical expansion comes at an immediate financial cost. In its latest financial breakdown, Alibaba revealed that model training costs are currently being routed through its "All Others" reporting segment. Losses within this division have widened notably, driven by aggressive infrastructure investments and massive marketing campaigns to promote its flagship Qwen chatbot. Despite these rising segment losses, market sentiment remains highly optimistic about the company's long-term infrastructure play, News.Az reports, citing Trading View.
Wall Street heavyweights are already betting big on this tech rollout. Morgan Stanley issued a bullish forecast for Alibaba’s cloud division, projecting revenue growth to hit +42% in fiscal Q1 2027 and surge to +45% for the full fiscal year 2027. The firm expects cloud margins to stabilize at 11.0% for the upcoming quarter and subsequently raised its BABA ADR price target to $190.
While equity research firms like Morningstar maintain that Alibaba remains fundamentally undervalued given its massive AI monetization potential, they also caution that recent cash outflows and declining net cash reserves could eventually create a bottleneck for the high-end capital spending required to sustain this AI arms race.
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