Bank of America Securities: Positive outlook on BABA-W (09988) raising 80 billion yuan for AI investment.

Bank of America Securities released a research report, maintaining the target price for Alibaba Group Holding Limited Sponsored ADR (09988, BABA.US) at $172 for U.S. stocks and HKD 168 for Hong Kong stocks, with a rating of "Buy" unchanged. Alibaba Group Holding Limited Sponsored ADR announced a placement of new shares in Hong Kong, raising HKD 80 billion, with all funds to be invested in full-stack artificial intelligence capabilities and infrastructure construction, increasing the group's net cash from approximately $31 billion to over $41 billion. The bank believes that the placement may affect market sentiment in the short term, as investors might worry about immediate dilution effects, increased depreciation related to AI infrastructure deployment, uncertainty regarding the duration of continued high capital expenditure, and the possibility of further external financing. However, the bank maintains a positive outlook, optimistic about management's strong guidance on cloud business growth, the economic benefits of AI investments, and the quarterly recovery of free cash flow, viewing this placement as a means to drive growth, diversify funding sources, and preemptively strengthen the balance sheet.