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2026-11-09 16:06:16 Goldman Sachs published a research report expecting aggregate net profit of Chinese internet companies for the September quarter to rise 9% YoY, while maintaining its preference for the gaming and entertainment sub-sectors due to their defensive growth characteristics. The bank expects weak consumption to continue weighing on e-commerce, advertising and local services, while cloud business revenue growth accelerates and profitability at transaction platforms improves from trough levels. Entering 4Q26, investor focus is expected to center on free cash flow, elevated artificial intelligence capital expenditure, and the monetization progress of enterprise AI models at major companies including TENCENT (00700.HK), BABA-W (09988.HK), PDD Holdings Inc. (PDD.US), MEITUAN-W (03690.HK) and JD-SW (09618.HK). Regarding Alibaba, the bank assessed the sustainability of the company's AI investment spending and returns beyond ROIC, and raised its forecasts for AI cloud and computing power growth, lifting its FY2028-FY2029 EPS forecasts by 2% to 4%. The bank expects premium pricing for GPU-as-a-Service to continue amid tight chip supply, and forecasts cloud business EBITDA to catch up with e-commerce levels in the quarter ending March 2028, making the cloud business the company's primary operating cash flow driver. The bank said market expectation downgrades have bottomed out and recent earnings are showing signs of an inflection point. Supported by potential upside in cloud business performance and forecast upgrades, the share price is expected to recover. It maintained its 12-month target prices for Alibaba Group Holding Limited (BABA.US) ADR and H shares at USD177 and HKD172 respectively, with a Buy rating. (da/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |