Will Alibaba’s (BABA) Q2 Earnings Gain From Cloud Strength?

April 14, 2024

32 2 minutes read

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Alibaba Group Holding Limited’s BABA second-quarter fiscal 2024 results, slated for release on Nov 16, are expected to reflect the impacts of the strengthening cloud computing segment.

Moreover, the segment has turned out to be one of the key contributors to the company’s overall top-line growth.

In the last reported quarter, revenues from the cloud computing segment increased by 4% from the prior-year period to RMB 25.12 billion ($3.5 billion), accounting for 10.7% of total revenues.

Click here to know how the company’s overall fiscal second-quarter results are expected to be.

Alibaba Group Holding Limited Price and Consensus

Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote

Factors to Note

Increasing spending from enterprise customers, driven by Alibaba’s continued efforts to add features to its cloud offerings, is likely to have driven the segment’s top-line growth in the fiscal second quarter.

Alibaba’s strong cloud services portfolio, powered by advanced technologies like AI, generative AI, Machine Learning and the Internet of Things, is expected to have aided it in addressing the rising demand for cloud architecture.

BABA has been taking solid initiatives toward making its key cloud products serverless in order to prevent customers from worrying about managing servers and infrastructure during the process of product development and deployment. These initiatives are expected to have continued driving Alibaba’s customer momentum in the quarter under review.

The company has been witnessing solid momentum across the Asia Pacific region for the past few quarters. The trend is expected to have persisted in the second quarter.

Alibaba’s cloud computing business has been gaining a lot of traction in China, as well as in other international regions. Its strengthening global data center network is anticipated to have been beneficial in the to-be-reported quarter.

Zacks Rank & Stocks to Consider

Currently, Alibaba carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Badger Meter BMI, Arista Networks ANET and Salesforce CRM. While Badger Meter sports a Zacks Rank #1 (Strong Buy), Arista Networks and Salesforce each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Badger Meter shares have gained 24.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.

Arista Networks shares have gained 56.4% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.4%

Salesforce shares have gained 57.4% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 22.54%.

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