---
title: "Goldman Sachs significantly raised Alibaba's capital expenditure forecast for the next three years to 460 billion: the internationalization of cloud business is underestimated, and AI spending transformation is reshaping growth!"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/260848996.md"
description: "Goldman Sachs has significantly raised Alibaba's capital expenditure forecast for the next three years to 460 billion yuan, making it one of Wall Street's most aggressive predictions. Analysts indicate that the transformation of AI capital expenditure is reshaping Alibaba's growth expectations. Although the company has recently experienced a pullback due to profit-taking, its breakthrough advancements in AI cloud computing capabilities and potential for international expansion provide new upward momentum for its stock price. It is expected that by fiscal year 2028, international business will contribute one-quarter of Alibaba Cloud's external revenue"
datetime: "2025-10-13T07:31:58.000Z"
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  - [en](https://longbridge.com/en/news/260848996.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/260848996.md)
---

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# Goldman Sachs significantly raised Alibaba's capital expenditure forecast for the next three years to 460 billion: the internationalization of cloud business is underestimated, and AI spending transformation is reshaping growth!

Goldman Sachs significantly raised its capital expenditure expectations and target price for Alibaba. Analysts stated that the transformation of AI capital expenditure is reshaping Alibaba's growth expectations. Although the company recently experienced a pullback due to profit-taking, its breakthrough advancements in AI cloud computing capabilities and potential for international expansion provide new upward momentum for its stock price.

According to Wind Information, Goldman Sachs reported on October 13 that Alibaba's AI revenue from its cloud computing business has achieved triple-digit growth for eight consecutive quarters, reaching 20% of cloud revenue in the June quarter. Based on the surge in full-stack AI capabilities and multimodal AI demand, Goldman Sachs raised its forecast for Alibaba Cloud's external revenue growth rate from the previous expectations of 30%/25%/17% to 33%/29%/19%.

Goldman Sachs significantly raised its forecast for Alibaba's capital expenditure over the next three years to RMB 460 billion, making it one of the most aggressive forecasts on Wall Street. Analysts believe that this level of investment will support Alibaba Cloud's leading position in China's AI cloud market and drive rapid growth in its international business. It is expected that by the fiscal year 2028, international business will contribute a quarter of Alibaba Cloud's external revenue.

Under the new long-short logic, analysts raised Alibaba's 12-month target price for its U.S. stock to $205, an increase of about 15% from the previous target price of $179.

## AI Capital Expenditure Transformation Framework Reshapes Growth Expectations

Goldman Sachs introduced an analytical framework for the transformation of AI capital expenditure into revenue in its report.

Analysts believe that **by comparing historical data from Amazon AWS and Google Cloud, Alibaba's development trajectory lags behind that of U.S. cloud service giants by about two years. This time lag coincides with the technological breakthroughs of ChatGPT (end of 2022) and DeepSeek (January 2025).**

Goldman Sachs estimates that Alibaba currently has a data center capacity of 3-4 GW and plans to expand it to 20 GW by 2032, which means an annual addition of about 2 GW of capacity. Based on the estimate that each GW of capacity can support 1 million GPUs, this expansion plan will support large-scale capital investments over the next three years.

In terms of capital expenditure, Goldman Sachs set three scenario assumptions.

In the baseline scenario, Alibaba's total capital expenditure for the fiscal years 2026-2028 is RMB 460 billion, with a capital expenditure to revenue conversion ratio of 0.2-0.3; in the optimistic scenario, total expenditure could reach RMB 550 billion, with a conversion ratio exceeding 0.3; in the pessimistic scenario, expenditure could drop to RMB 380 billion, with a conversion ratio below 0.2.

## Internationalization Strategy Enhances Valuation Ceiling

Alibaba Cloud's international expansion is a key factor in Goldman Sachs raising its valuation.

Analysts stated that Alibaba Cloud has established 91 availability zones in 29 regions, with 900 overseas nodes. **It is expected that the revenue share from international business will grow from the current single-digit percentage to about 25% by the fiscal year 2028, with a compound annual growth rate in the high double digits.** Analysts emphasize that **Alibaba Cloud enjoys a premium pricing in overseas markets,** with its Qwen model's international pricing significantly higher than domestic levels. Additionally, Alibaba Cloud is accelerating the construction of its first data centers in Brazil, France, and the Netherlands, and upgrading existing facilities in Mexico, Japan, and three other locations, adding 28 AI-specific suites.

In terms of enterprise customer development, Alibaba Cloud has secured orders from multinational companies such as AstraZeneca. AstraZeneca is using Alibaba Cloud's European nodes to build a drug discovery AI platform, improving efficiency by approximately 300%, providing strong evidence of Alibaba Cloud's international capabilities.

## Intensifying Competition in Quick Commerce Increases Short-term Profit Pressure

Despite raising the target price, Goldman Sachs also warned of the short-term challenges facing Alibaba.

Analysts expect that due to investments in the instant commerce business (including food delivery), Alibaba's group EBITA for the September quarter will decline by 80% year-on-year. The instant commerce business lost RMB 11 billion in the June quarter, and this is expected to expand to RMB 36 billion in the September quarter.

Goldman Sachs believes that competition in the instant commerce business with Meituan will be a key variable. In the long term, the market share for food delivery and instant commerce will form a pattern of 5:4:1 among Meituan, Alibaba, and JD.com. **Alibaba needs to prove that its investments in instant commerce can generate synergies, particularly by driving the commercialization monetization rate (CMR) growth through cross-selling.**

The report points out that Alibaba's management's confidence in CMR growth comes from advancements in advertising technology and the instant commerce business. The merchant penetration rate for site-wide advertising products has exceeded 30%, while instant commerce can contribute 2-3 percentage points to CMR in the medium term, and up to 5-10 percentage points in the long term.

Goldman Sachs' newly set long-short scenario analysis shows that in an optimistic case, Alibaba's target price could reach $280, representing a 76% upside from the current stock price; in a pessimistic case, it would be $141, with only an 11% downside risk. The 6:1 positive-to-negative return ratio leads analysts to believe that the current stock price pullback presents an attractive buying opportunity

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