CICC: Maintains BABA-W (09988) "Outperform" Rating with Target Price of HK$172

CICC released a research report maintaining its revenue and profit forecasts for BABA-W (09988, BABA.US) and its "Outperform" rating, with target prices of HK$172 and US$178 for the Hong Kong and US shares respectively, implying 58% and 60% upside from current prices. The bank is bullish on the company's cloud computing and AI growth potential. Currently, the company's Hong Kong and US shares trade at 16x and 16x FY27, and 11x and 11x FY28 non-GAAP P/E ratios, respectively. CICC's key views are as follows: Company Update CICC was recently invited to attend the 2026 Tmall Double 11 Global Shopping Festival launch event. This year, a total of 1 million global brands and 72 million products are participating, both hitting record highs. The event centered on brands' operations in the AI era, introducing the latest progress of AI in consumer search, merchant advertising, and merchants' internal operations. AI across the full chain helps merchants uncover new business opportunities On the product side, at the platform level, Taobao's underlying AI models have incorporated intent understanding, enabling the e-commerce platform's search and recommendation mechanisms to deeply understand users and products, giving products more opportunities for cross-scenario and cross-category matching. On the consumer side, Taobao AI Search, based on the Qwen3.8 series multimodal models, has shifted from keyword search to long-tail intent understanding. In September 2026, general knowledge-related queries grew 50.4% versus the same week in April; features such as Tap-to-Shop (image search), voice shopping guides, and AI virtual try-on also make Taobao better understand consumers and enhance the shopping experience. On the merchant side, AI has extended from platform tools to merchants' daily operational workflows. Wanxiang Dianjing replaces tag-based targeting with AI reasoning, helping merchants discover previously uncovered audiences; it will subsequently cover all of Alimama's advertising products, which is expected to improve merchants' advertising returns and support advertising monetization. In addition, Qwen Office launched the first industry versionthe e-commerce editionbefore Double 11, positioned as a third-party e-commerce Agent for merchants across all platforms, enabling AI to take on store inspections, business analysis, creative generation, and other operational tasks upfront. Promotion rules continue direct price cuts and instant discounts, subsidies increase, AI extends to marketing and new categories On pricing, the platform continues last year's rules of canceling cross-store threshold discounts in favor of merchants' direct price cuts and instant discounts, and has invested over RMB 3 billion in platform supplementary coupons and over RMB 2 billion in Taobao Coin benefits. On the AI front, the platform will launch AI virtual idols for 24-hour livestream selling, and tokens from model providers such as Z.AI and Kimi will also participate in Double 11 as a new category. Earnings Forecast and Valuation CICC keeps its revenue and profit forecasts unchanged and maintains the "Outperform" rating on BABA-W, with target prices of HK$172 and US$178 for the Hong Kong and US shares, implying 58% and 60% upside from current Hong Kong and US share prices, respectively. The company's Hong Kong and US shares currently trade at 16x and 16x FY27, and 11x and 11x FY28 non-GAAP P/E ratios, respectively. Risk Factors Macroeconomic uncertainty; regulatory impact; corporate demand below expectations.