UBS and Jefferies project the firm’s revenue to accelerate to 9% in June quarter, well above the 3% recorded in the previous quarter
Alibaba Group Holdingsurged to a high of 13.8 per cent in Hong Kong on Wednesday as equity analysts expect revenue to reaccelerate in the June quarter, driven by growing demand for artificial intelligence and narrowing losses in food delivery.
Tencent Holdingsand Meituansaw their shares grow 3.8 and 3.3 per cent, respectively, while the Hang Seng Tech Index increased by nearly 5 per cent.
UBSon Wednesday. That would mark a sharp improvement from the 3 per cent revenue growth recorded in the previous quarter.
Alibaba, which owns the South China Morning Post, typically releases its June quarter results in August.
In a research note on Wednesday, UBS cited margin improvements in Alibaba’s core e-commerce operations, narrowing losses in the food delivery business and accelerating cloud growth with improving margins as reasons the market was unlikely to cut the earnings forecast for the quarter.
“With that, the market is likely to refocus on its valuable AI assets and AI growth angle,” UBS analysts led by Kenneth Fong said in the note.
The bank expected Alibaba’s cloud unit to enjoy 45 per cent revenue growth in the June quarter, while the annual recurring revenue (ARR) of its AI model services was projected to reach 10 billion yuan (US$1.5 billion). ARR is used to project a firm’s 12-month revenue by extrapolating earnings from a shorter period, such as a month or a quarter.