Alibaba will announce its FY2026 Q4 (Q1 2026) results in May. Ahead of the earnings report, Morgan Stanley, HSBC, and Nomura have released forward-looking reports with highly convergent core judgments: cloud business growth is expected to accelerate further to over 40%, instant retail (QC) losses are approaching a clear inflection point, and continued investment in the Qwen model will be the primary performance pressure this quarter.
All three institutions maintain &#34;Buy&#34; ratings, with target prices ranging from $172 to $200. Compared to the current stock price of approximately $120, this implies a potential upside of over 40%. For investors, the core issue this quarter is not whether short-term profitability is strong, but whether Alibaba can deliver on its dual promise of &#34;narrowing losses + accelerating cloud growth.&#34;
<h2>Cloud Business Accelerates to 40%, MaaS Monetization is the Largest Mid-term Growth Driver</h2>
Morgan Stanley predicts that Alibaba Cloud's Q4 revenue growth will accelerate further to over 40% from 36% in the previous quarter, with EBITA margins remaining stable at 9%.
The drivers exhibit a dual-engine pattern: recent price increases for cloud services support short-term growth, while MaaS (Model as a Service) builds the mid-term path. Institutions expect the share of MaaS revenue to rise from less than 10% currently to over 50% within five years. Management's long-term EBITA margin target for the cloud business is 20%, which still offers significant upside from the current high single-digit levels.
Qwen's token usage share in China's enterprise market surged from 18% in the first half of 2025 to 32% in the second half, ranking first among all models.
HSBC data shows that the Qwen App reached 223 million monthly active users in February 2026, with a 30-day user retention rate of 39%, as the moat in the enterprise sector continues to deepen.
<h2>Instant Retail Loss Reduction Roadmap is Clear, &#34;Peak of the War&#34; Has Passed</h2>
Morgan Stanley estimates that instant retail losses in Q4 will be approximately RMB 18 billion, narrowing from the estimated RMB 22 billion in the previous quarter.
Management has set a clear goal to halve full-year losses in FY27 compared to FY26 (Morgan Stanley expects full-year FY26 QC losses to be around RMB 86 billion, with a target of approximately RMB 43 billion for FY27), halve them again in FY28, and achieve break-even by FY29.
Nomura also predicts that QC losses will narrow to about RMB 43 billion in FY27. The three institutions share the judgment that the &#34;most intense phase of the instant retail war&#34; has passed. After stabilizing its market share, Alibaba is shifting its strategic focus from &#34;market share acquisition&#34; to &#34;efficiency improvement.&#34; This shift is also expected to provide marginal breathing room for Meituan's delivery business.
<h2>CMR Growth Re-accelerates, Accounting Adjustments Cause Visual Disturbance</h2>
Investment banks expect Alibaba's China e-commerce segment customer management revenue (CMR) to grow by approximately 7% year-on-year on a comparable basis in Q4, a significant rebound from 1% in the previous quarter, reflecting the positive transmission of improved consumption data in January and February.
However, because Alibaba will reclassify platform incentives for top merchants from marketing expenses to a &#34;deduction&#34; from CMR starting this quarter, the reported CMR growth rate will be only about 1%. HSBC estimates that this adjustment causes a growth rate discrepancy of approximately 6 percentage points.
Excluding instant retail, the e-commerce segment's EBITA is expected to remain basically flat year-on-year, a significant improvement from the approximately 7% decline in the previous quarter.
<h2>Three Banks' Target Range $172–$200, AI Monetization Pricing Still Inadequate</h2>
While there are differences in the target prices of the three institutions, their buying logic is consistent.
Morgan Stanley maintains an Overweight rating and a $180 target price, based on a DCF model (WACC 10%, perpetual growth rate 3%), corresponding to a 23x non-GAAP P/E for FY28. This represents a significant premium over the current valuation of approximately 16x. Meanwhile, they lowered their adjusted EBITA forecasts for FY26 and FY27 by 7% and 12%, respectively, mainly reflecting higher-than-expected investment in Qwen.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/fa5ed70d-9cd6-43ea-a595-a0928132a44b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/fa5ed70d-9cd6-43ea-a595-a0928132a44b.png"/>
HSBC slightly lowered its target price from $180 to $172, also due to upward revisions in loss assumptions for &#34;other businesses.&#34; Nomura maintains a $200 target price, corresponding to approximately 20x P/E for FY28.
The consensus among the three institutions is: the path to AI monetization is becoming clearer, the timetable for narrowing instant retail losses is anchored, and current valuations still do not adequately price these two core logics.

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Three major investment banks turn bullish on Alibaba ahead of its earnings: cloud business growth is expected to exceed 40%, the roadmap for narrowing instant retail losses is clear, and the Qwen model is accelerating its penetration into the enterprise sector. Morgan Stanley, HSBC, and Nomura have set target prices between $172 and $200, representing a potential upside of over 40% from the current share price. The consensus among the three institutions is that both AI monetization and the loss-reduction narrative are significantly undervalued by the market

- Alibaba is set to announce its Q4 2026 results in May, with Morgan Stanley, HSBC, and Nomura issuing reports predicting cloud business growth to exceed 40% and a clear turning point for instant retail losses.  
- The three firms maintain buy ratings with target prices between $172 and $200, suggesting over 40% upside from the current $120 stock price, focusing on the dual promises of reduced losses and accelerated cloud growth.  
- Additionally, instant retail losses are expected to decrease significantly, while the rapid increase in CMR growth indicates positive consumer spending trends.

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What to Expect from Alibaba's Q1 Report? Instant Retail Losses Poised to Halve, Cloud Growth May Top 40%