Citi Reaffirms Buy on Alibaba (BABA) After Robust Cloud Growth

Alibaba Group Holdings Ltd (NYSE:BABA) is one of the top 10 mega-cap stocks to buy according to hedge funds. . On September 1, Citi reiterated its Buy rating on Chinese e-commerce giant Alibaba Group Holdings Ltd (NYSE:BABA), while increasing its price target from $148 to $187. The huge increase in the price target comes after the company reported stellar Q1 Fiscal Year 2026 results on August 29. The renewed price target implies an upside of 37.19% from the current price of $136.3 on September 3.

Citi was impressed by the company’s solid cloud growth and noted that the management sees growth sustaining going forward. The company’s Cloud Intelligence Group generated revenue of $4.66 billion in Q1, a solid 26% growth year-over-year. The stock has surged by over 13% since reporting earnings.

Alibaba’s domestic e-commerce platforms Taobao and Tmall reported a 10% year-over-year growth in Q1, which was driven by a 10% increase in customer management fees. The company’s push towards faster local delivery has yielded returns, with its quick commerce revenue rising 12% year-over-year.

Alibaba reported an EPS of $2.058 per share, beating Wall Street estimates of $1.977 per share. The company’s net margin expanded to 17.41%, compared to 5.24% in the previous quarter and 12.99% in the previous fiscal year. The stock is currently trading at a more than reasonable forward P/E of 15.83x, which is well below many global tech peers.

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Disclosure: None.