BofA Securities: Alibaba's Cloud Computing Conference Reinforces Full-Stack AI Opportunity, Maintains Buy

By ZhiTong Finance

BofA Securities has reiterated a "Buy" rating on Alibaba-W (09988.HK / BABA.US), setting a target price of $175 for US-listed shares and HK$172 for Hong Kong-listed shares, according to a research report released this week.

Key Takeaways from Alibaba Cloud's Apsara Conference

At the flagship Apsara Conference hosted by Alibaba Cloud, CEO Eddie Wu reaffirmed the company's long-term commitment to artificial intelligence. Wu emphasized that as AI advances toward machine intelligence, Alibaba will continue to invest in AI models, chips, and cloud infrastructure.

BofA observed:

• Strong and accelerating customer demand
• A clear strategic commitment to AI agents
• Ongoing development of Recursive Self-Improvement (RSI) architecture
• Increasingly autonomous and self-reinforcing full-stack capabilities across infrastructure, models, platforms, and applications

The conference reinforced BofA's positive outlook on Alibaba. The bank believes Alibaba's industry-leading full-stack AI ecosystem enables value capture across multiple layers of the AI stack, with:

• Cloud business driving near-term monetization and AI services
• Applications and international expansion supporting longer-term growth

The next potential catalyst is the quarterly update for the period ending September, expected before the October blackout period.

Data Center Expansion Plans

Alibaba plans to operate over 20 gigawatts (GW) of global data center capacity by 2032, underscoring management's confidence that medium- to long-term AI computing demand will significantly exceed current supply. This implies an average annual addition of approximately 2 GW.

BofA estimates construction costs at $30–35 billion per GW, but expects a substantial portion to be financed through leases and other cooperative arrangements, limiting Alibaba's direct capital expenditure burden. As a result, the bank maintains its FY2027–FY2028 CapEx forecast of RMB 230–250 billion.

The 20 GW target is broadly consistent with management's guidance of $100 billion in external AI and cloud revenue by FY2031 (approximately calendar 2030).

New AI Accelerator: Zhenwu V900

Alibaba's semiconductor arm, T-Head, unveiled its latest AI accelerator, the Zhenwu V900, which management describes as China's highest-performing AI chip. Key specifications include:

• 3x performance over the previous Zhenwu M890
• Scalable to clusters of up to 500,000 chips
• Supports cutting-edge model training and inference

Alibaba management expects significantly higher shipment volumes for T-Head chips in the coming years. The target is to increase the share of self-developed chips in Alibaba Cloud's deployed computing power from less than 10% currently to 40–50% over time. BofA views this as a key driver for improving supply chain control and cost efficiency in AI infrastructure.

Tongyi Model Roadmap

Alibaba plans to further advance its Tongyi Qianwen (Qwen) Max series, with Qwen 4.5 and Qwen 5 targeting 5 to 10 trillion parameters. The company will also address broader deployment needs with Flash, Plus, and local models.

Qwen 4 is expected to launch soon, featuring upgrades to its multimodal capabilities, including image, video, audio, and world models.