Alibaba Group Holding (BABA/9988.HK) FY2Q27E Preview: Ecommerce EBITA Trending Better w/ Strong Cloud

On the back of NBS July/Aug online product sales (+3.3%/+2.2%), we model Sept-Q Taobao/Tmall GMV at LSD YoY, yielding like-for-like CMR of +1% (reported CMR -5.0% YoY). Solid cost discipline and improving quick commerce UE support a +3.6% upward revision to FY2Q27E Ecommerce Group EBITA (Rmb38.8bn, 20.2% margin). Driven by strong enterprise AI compute demand, we raise cloud revenue outlook to +54%/+52%/+44% YoY for FY27–29E, and model FY2Q27E cloud revenue to accelerate to +52% YoY with 12.5% EBITA margin. More importantly, we expect cloud adj. EBITA to fully self-fund AI Labs model training and application spend starting in FY3Q27E. We model FY2Q27E total consolidated revs at Rmb268.1bn (+8.2% YoY) and non-GAAP NP of Rmb26.4bn (9.9% margin), with adj. EBITDA of Rmb41.4bn (15.4% margin). Post-revision, we raise TP to US$193/HK$192 (from US$190/HK$189) for ADS/H-share. Maintain Buy on accelerating AI/Cloud monetization, self-sustaining AI economics, and attractive valuation.