Bank of America Securities has maintained its Buy rating on Alibaba Group Holding with a $172 price target, following the company’s $10.3 billion equity placement to fund artificial intelligence initiatives.
The placement, which involves 710 million shares priced at HK$112.70 each, represents a 3.6% discount to Alibaba’s U.S. ADR-implied close and an 8.4% discount to Friday’s Hong Kong close. The new shares account for 3.7% of the company’s pre-deal share count and 3.6% of its enlarged capital. Pro forma net cash is expected to rise from $31 billion to over $41 billion before deployment.
BofA acknowledged that the transaction may initially weigh on sentiment due to dilution, rising depreciation from AI infrastructure investments, and uncertainty over the duration of elevated capital expenditures. However, the firm remains constructive, citing strong cloud guidance, improving AI investment economics, and a sequential recovery in free cash flow. Alibaba plans to allocate all net proceeds toward full-stack AI capabilities and infrastructure.
The company reported first-quarter fiscal 2027 revenue of RMB 269 billion, a 9% year-over-year increase, while adjusted EBITDA reached RMB 39.1 billion, exceeding consensus by 7%. Alibaba’s current ratio stands at 1.36, with a P/E ratio of 29.5 and earnings per share of $4.38.
Other analysts have adjusted their outlooks following the placement. Benchmark reiterated a Buy rating with a $220 target, Mizuho maintained an Outperform rating at $195, while Baird reduced its target to $160. BofA’s $172 target implies a 45% upside from Alibaba’s closing price of $118.47 on Friday.
