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Alibaba Group stock fell approximately 3% in Hong Kong on Thursday after Jefferies reduced its price target for the Chinese tech giant.
The price action revived a familiar market debate on how long investors are willing to wait for Alibaba’s costly AI push to translate into stronger profits.
Jefferies lowered its target price on the US-listed stock to $185 from $212 but maintained a Buy rating, signaling that the brokerage has not abandoned its longer-term case.
Alibaba’s Hong Kong-listed shares were down roughly 2.9% at HK$122.70. The market reaction matters because it shows where sentiment is shifting.
Jefferies cuts target, but stops short of turning bearish
Jefferies’ move is best read as a reset in expectations rather than a full-blown bearish turn.
Keeping a Buy rating while lowering the target tells readers that the brokerage still sees upside in Alibaba.
Markets often treat these mixed calls harshly because a lower target implies reduced room for gains and raises doubts over the quality of future earnings.
The nuance is important as a true “sell” story would require clearer evidence that Alibaba’s core thesis is breaking down.
Instead, what investors got was a warning that the company’s investment cycle is intensifying just as confidence in China’s consumer recovery remains fragile.
Alibaba stock: AI is driving growth and cost-anxities
Alibaba’s AI strategy is not the weak point in operational terms. In fact, it is one of the few areas clearly delivering strong growth.
Alibaba’s December-quarter revenue rose 1.7% to 284.84 billion yuan, missing analyst estimates, while net income slumped 66.3%.
At the same time, cloud revenue jumped 36%, helped by AI-related demand.
That is the contradiction investors are now trying to price. The company is showing real momentum in cloud and AI, but the bill is rising quickly.
Jefferies said its lower target reflects heavier spending to promote Alibaba’s Qwen AI offerings and bigger expected losses in non-core businesses.
The analysts also pointed to aggressive spending on one-hour delivery and holiday promotions as factors that hit profits in the latest quarter.
Is it time to sell BABA?
Jefferies still rates Alibaba a Buy, and Morgan Stanley also reiterated an Overweight rating and a $180 target in late March.
The analysts have repeatedly argued that Alibaba’s AI ecosystem and chip advances support the broader long-term thesis.
That suggests the Street is reassessing timing and execution risk, not walking away from the stock altogether.
The bear case is straightforward. AI spending could remain heavy for longer, non-core losses could deepen, and weak consumer demand in China could keep the main commerce engine from offsetting those pressures.
In that scenario, investors may continue to lose patience even if the strategic direction makes sense.
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