Alibaba Group stock regained some ground Friday after a 7.5% slide Thursday that followed disappointing earnings results. The China e-commerce and cloud-computing giant's March quarter earnings and sales missed Wall Street forecasts.
Alibaba reported adjusted earnings of 12.52 yuan per American depositary share on sales of 236.45 billion yuan, or $32.8 billion, for the March-ended quarter. Analysts polled by FactSet projected the tech giant would post adjusted earnings of 12.56 yuan per ADS on sales of 239.6 billion yuan, or $33.25 billion.
Adjusted earnings for Alibaba's fiscal fourth quarter increased 23% in local currency on a per-share basis. Sales increased 7%, compared to 7.6% year-over-year revenue growth in Alibaba's December quarter and 5.2% growth before that in the September-ended quarter.
On the stock market today, U.S.-listed Alibaba stock gained around 1% to 124.98 in morning trades. Shares are bouncing to just below Alibaba stock's 50-day moving average.
AI Helps Alibaba Cloud Growth Accelerate
"Our results this quarter and for the full fiscal year demonstrate the ongoing effectiveness of our 'user first, AI-driven' strategy, with core business growth continuing to accelerate," Chief Executive Eddie Wu said in a news release.
Revenue from Alibaba's Cloud Intelligence Group increased 18% year over year to 30.1 billion yuan, compared to estimates of 16.8% growth. Alibaba said in its release that AI-related product revenue grew by triple digits for a seventh consecutive quarter.
Alibaba committed earlier this year to spending more than $50 billion over the next three years on the tech infrastructure required for AI. That's despite the trade war between China and the U.S. creating questions about the availability of AI-related supplies, such as chips from Nvidia.
"Looking ahead, we expect AI to remain a key driver of accelerated revenue growth for Alibaba Cloud," Wu told analysts Thursday, according to a FactSet transcript. "While uncertainties persist in the global AI supply chain, customer demand remains strong and unwavering."
Mizuho analyst Wei Fang lowered the firm's price target for Alibaba stock to 160 from 170 but stuck with an outperform rating.
"Although total revenue slightly missed expectations, core TTG (Taobao and Tmall Group) fundamentals are improving driven by better take rate and Cloud growth further accelerating<" Fang wrote. "Consolidated EBITA came in in-line. We are encouraged by expanding vertical adoption on AliCloud and additional penetration among SMEs (small and medium-sized enterprises).
Alibaba Stock Up 48% This Year
As of Friday morning trades, Alibaba's U.S.-listed stock has rallied 47.7%. The tech giant's helped by optimism about its ability to offer enterprise and consumer AI tools that boost its cloud business.
Shares remain below highs from mid-March, however, amid concerns about a U.S.-China trade war denting consumer confidence. Alibaba is also still navigating an uncertain overall economic environment in China, with increased competition from PDD Holdings, TikTok parent company ByteDance and JD.com. JD reported stronger-than-expected March quarter sales growth earlier this week.
Alibaba stock had formed a cup base with a 148.43 buy point coming into the report, according to IBD MarketSurge. But the stock fell out of that base on Thursday.
Alibaba stock has an IBD Composite Rating of 96 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one.
