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Can Strong Cloud Growth Propel Alibaba's (BABA) Q2 Earnings?
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Alibaba Group Holding Limited’s (BABA - Free Report) expanding core commerce and cloud portfolio are expected to reflect on fiscal second-quarter results, slated to release on Nov 5.
The cloud business has fast emerged as a major contributor to top-line growth. Cloud computing has been emerging as a key technology to fight the battle against the coronavirus pandemic. This technology has been witnessing higher usage globally as it allows data interoperability in a scalable, cost-efficient way by data collection, processing, analyzing and sharing across platforms.
In the last reported quarter, revenues from the cloud computing segment increased 59% from the prior-year period to RMB12.3 billion (US$1.75 billion). Also, revenues from its core commerce segment were up 34% year over year to RMB133.3 billion (US$18.9 billion).
The Zacks Consensus Estimate for fiscal second-quarter cloud computing segment revenues is pegged at US$2.1 billion, indicating growth of 61.3% from the year-ago reported figure. Moreover, the consensus mark for core commerce revenues is pegged at $19.4 billion, indicating an improvement of 16.7% from the year-ago reported figure.
Click here to know how the company’s overall fiscal second-quarter results are expected to be.
Innovation in data technology, widespread application of big data, and increasing validation for Taobao and Tmall portals are likely to have expanded revenues from the cloud computing segment in the to-be-reported quarter.
Revenues from this segment have been impressive over the last few quarters. Sales growth is likely to have got a boost, driven by an increase in the number of paying customers and improved revenue mix of higher valued-added services.
During the quarter, Alibaba Cloud unveiled a cloud computer, which marks the company’s first such device. The palm-sized cloud computer enables users to utilize unlimited computing resources anytime and anywhere, with the aid of back-end cloud support.
Further, Alibaba Cloud introduced an autonomous logistic robot, which is meant for boosting the last-mile delivery capacity of Alibaba in the e-commerce space.
Additionally, the company unveiled Cloud Lakehouse - an advanced big data architecture, Lindorm - a cloud-native multi-model database, PAI-DSW 2.0 - a machine-learning interactive development platform and Sandboxed-Container 2.0 - a cloud container service for Kubernetes.
These steps taken by the company highlight the growing importance of the cloud business, which is likely to have boosted revenues in the quarter.
Alibaba rolled out a number of products based on the emerging technologies of Artificial Intelligence, Machine Learning and Internet of Things to cater to rising demand for cloud architecture, along with data analytics and security in the retail industry.
These products, which are expected to develop a collaborative management platform across various businesses, should have driven its revenues in the to-be-reported quarter.
Markedly, cloud revenues are expected to have increased in the quarter, owing to an increase in spending from enterprise customers. The company has been continually adding new features to cloud offerings for driving customer spending.
Its customer base expanded in the Asia-Pacific region, driven by portfolio strength. The expanding clientele is likely to have driven net sales of this segment in the quarter.
Alibaba’s cloud computing business has been gaining a lot of traction. It is a dominant force in China but has also gained traction in other regions. The company has opened new data centers across the world. These factors are anticipated to reflect on its upcoming results.
Given the dominant position of Alibaba’s cloud business in China and aggressive international expansion strategies, cloud computing is expected to have been one of the major growth drivers in the quarter to be reported.
Long-term earnings growth for ON Semiconductor, Overstock.com, and Revolve Group is currently projected at 1.3%, 20% and 17.3%, respectively.
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Image: Bigstock
Can Strong Cloud Growth Propel Alibaba's (BABA) Q2 Earnings?
Alibaba Group Holding Limited’s (BABA - Free Report) expanding core commerce and cloud portfolio are expected to reflect on fiscal second-quarter results, slated to release on Nov 5.
The cloud business has fast emerged as a major contributor to top-line growth. Cloud computing has been emerging as a key technology to fight the battle against the coronavirus pandemic. This technology has been witnessing higher usage globally as it allows data interoperability in a scalable, cost-efficient way by data collection, processing, analyzing and sharing across platforms.
In the last reported quarter, revenues from the cloud computing segment increased 59% from the prior-year period to RMB12.3 billion (US$1.75 billion). Also, revenues from its core commerce segment were up 34% year over year to RMB133.3 billion (US$18.9 billion).
The Zacks Consensus Estimate for fiscal second-quarter cloud computing segment revenues is pegged at US$2.1 billion, indicating growth of 61.3% from the year-ago reported figure. Moreover, the consensus mark for core commerce revenues is pegged at $19.4 billion, indicating an improvement of 16.7% from the year-ago reported figure.
Click here to know how the company’s overall fiscal second-quarter results are expected to be.
Alibaba Group Holding Limited Revenue (TTM)
Alibaba Group Holding Limited revenue-ttm | Alibaba Group Holding Limited Quote
Delving Deeper
Innovation in data technology, widespread application of big data, and increasing validation for Taobao and Tmall portals are likely to have expanded revenues from the cloud computing segment in the to-be-reported quarter.
Revenues from this segment have been impressive over the last few quarters. Sales growth is likely to have got a boost, driven by an increase in the number of paying customers and improved revenue mix of higher valued-added services.
During the quarter, Alibaba Cloud unveiled a cloud computer, which marks the company’s first such device. The palm-sized cloud computer enables users to utilize unlimited computing resources anytime and anywhere, with the aid of back-end cloud support.
Further, Alibaba Cloud introduced an autonomous logistic robot, which is meant for boosting the last-mile delivery capacity of Alibaba in the e-commerce space.
Additionally, the company unveiled Cloud Lakehouse - an advanced big data architecture, Lindorm - a cloud-native multi-model database, PAI-DSW 2.0 - a machine-learning interactive development platform and Sandboxed-Container 2.0 - a cloud container service for Kubernetes.
These steps taken by the company highlight the growing importance of the cloud business, which is likely to have boosted revenues in the quarter.
Alibaba rolled out a number of products based on the emerging technologies of Artificial Intelligence, Machine Learning and Internet of Things to cater to rising demand for cloud architecture, along with data analytics and security in the retail industry.
These products, which are expected to develop a collaborative management platform across various businesses, should have driven its revenues in the to-be-reported quarter.
Markedly, cloud revenues are expected to have increased in the quarter, owing to an increase in spending from enterprise customers. The company has been continually adding new features to cloud offerings for driving customer spending.
Its customer base expanded in the Asia-Pacific region, driven by portfolio strength. The expanding clientele is likely to have driven net sales of this segment in the quarter.
Alibaba’s cloud computing business has been gaining a lot of traction. It is a dominant force in China but has also gained traction in other regions. The company has opened new data centers across the world. These factors are anticipated to reflect on its upcoming results.
Given the dominant position of Alibaba’s cloud business in China and aggressive international expansion strategies, cloud computing is expected to have been one of the major growth drivers in the quarter to be reported.
Zacks Rank & Other Key Picks
Currently, Alibaba carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include ON Semiconductor Corporation (ON - Free Report) , Overstock.com, Inc. and Revolve Group, Inc. (RVLV - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for ON Semiconductor, Overstock.com, and Revolve Group is currently projected at 1.3%, 20% and 17.3%, respectively.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
Download Marijuana Moneymakers FREE >>