BofA Securities maintained its Buy rating and $172 price target for Alibaba Group Holding after the company raised approximately $10.3 billion in a primary share offering, citing long-term benefits from AI infrastructure investment despite near-term dilution risks.
The Hong Kong-listed placement involved the issuance of 710 million new shares at HK$112.70 each, representing a 3.6% discount to the U.S. ADR close and an 8.4% discount to the prior Friday’s Hong Kong close. Proceeds will fully fund Alibaba’s expansion into full-stack AI capabilities and supporting infrastructure, the company said.
BofA acknowledged that the capital raise could pressure sentiment initially due to dilution, increased depreciation from AI investments, and uncertainty over the duration of elevated spending levels. However, the bank remains constructive on Alibaba’s cloud division growth, improving profitability from AI initiatives, and a sequential rebound in free cash flow. The firm views the transaction as a strategic move combining growth financing, resource diversification, and balance sheet strengthening.
Alibaba reported fiscal first-quarter 2027 revenue of RMB 269.0 billion, up 9% year-over-year and exceeding market expectations. Adjusted EBITDA reached RMB 39.1 billion, topping consensus by 7%. Pro forma net cash is projected to rise from $31 billion to over $41 billion before any allocation of proceeds.
BofA’s price target of $172 implies a 45% upside from Alibaba’s closing price of $118.47. Other analysts maintained positive outlooks: Benchmark kept a Buy rating with a $220 target, Mizuho held an Outperform rating at $195, while Baird trimmed its target to $160.
Separately, Alibaba unveiled the beta version of its AI music-generation model, HappyShrimp 1.0, which converts text prompts into music.
