Key insights
- Alibaba's stock is falling after reporting weaker-than-expected revenue, despite a bullish outlook for its AI and cloud business. The company aims to quintuple its cloud and AI revenue to $100 billion annually in five years, but core e-commerce results are weak, with net income down 67%. The market views the AI promise as insufficient to offset current struggles in the core business. Elliott Investment Management is building a stake in Align Technology.
Yahoo Finance Markets and Data Editor Jared Blikre and Market Catalysts host Julie Hyman take a closer look at some of Thursday morning's trending tickers and stories.
Alibaba (BABA) stock is plunging after the company reported revenue that fell short of expectations, though analysts are still bullish on Alibaba's artificial intelligence (AI) outlook.
Elliott Investment Management is building a stake in Invisalign-maker Align Technology (ALGN).
Let's get to some of today's other trending tickers. We're taking a look at Alibaba, Accenture and Align technology and Jared Blikry is with me, markets in data editor.
Um let's talk about Alibaba first. Of course, the Chinese e-commerce giant. Um it did report weaker than expected revenue, but the company also said it's going to get to um to quintuple um its cloud and AI revenue. $100 billion annually in five years is the company's aim here.
Um but the shares are pulling back a little bit. So it looks like like XAI, not XAI, Elon Musk's XAI. excluding AI, the business is not as strong.
They still got to sell stuff.
And the problem is there's this brutal competition in that industry and e-commerce in China. Not a surprise there. So let's go over some of the earnings highlights. AI cloud is still the part that works. So cloud revenue up 36%, AI related product revenue, uh triple digit growth for 10 consecutive quarters.
Uh the company says the business goal of Alibaba's AI strategy is very clear. Over the next five years, our goal is to surpass $100 billion dollars in combined combined cloud and AI external revenue, what you were just talking about Julie. Core results were weak enough to overpower that AI pitch though. So revenue was up 2% to 285 billion yuan. Net income down 67%. So that's a big drop in in profits.
Um so Alibaba needs a number of things to kind of fall into place. The monetization story still not really convincing yet. AI revenue goal implies roughly 35% annual growth. E-commerce and food delivery still the main earnings drivers, but we talked about those headwinds of being so much competition there. Bloomberg Intelligence saying Alibaba's push into agentic AI and creation of token Hub will not alter the e-commerce giant's AI profit profit outlook, which remains challenged.
So, stock is down 6.4%.
If we go to the Wi-Fi interactive, I think a six year.
Yeah, it's just kind of meh more recently.
Yeah, let's go. six years will give you the 2020 peak. Uh that was uh I believe that was the peak. Here's a 10-year chart and you can see we've come back. This was almost exactly the halfway point right there. That's a place where sell short sellers naturally come in. It's called the halfway back and they entered with force and so that's been a a tough spot right around 180 for Alibaba group.
Um you know, they're going to need some big catalyst to overcome that level and it looks like they've got a bit of a road. It's kind of a show me story in AI.
Yeah. Yeah. Align Technology. uh activist investor Elliott Management has built a stake in the Invisalign maker. Um those shares are up about 4% on that report. The report by the way is according to Bloomberg. Um and
Not a lot of details.
so yeah, not a lot of details on what um they want from the company, but the the shares certainly haven't been doing great.
Yeah, they I mean, they might be counting on a rebound in the industry and I do have Barclays was kind of hinting at that. They said the dental markets may be stabilizing, so it could be a strategic time here. But um Elliot looks like they're going to be, if not already, one of the company's largest investors. They said they're going to engage with management uh on different ways to lift the stock price.
And this is kind of a classic activist setup. So you got strong brand, category leader, but badly lagging stock. And so Elliot's going to get involved here. Chart it real quick on the Wi-Fi interactive up about 4% today. And as I like to do here, we'll go back and we can see this the stock peaked in uh about mid 2021 and it's just been kind of a steady decline ever since.
Yeah, I mean if you were home during the pandemic, nobody, you know, you might as well,
Yeah, fix your teeth.
Get fixed your teeth, why not? All right, Jared, thanks a lot. I appreciate it.
Thank you.