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Will Strong Cloud Growth Propel Alibaba (BABA) Q1 Earnings?
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Alibaba Group Holding Limited’s (BABA - Free Report) expanding core commerce and cloud portfolio are expected to have performed well, which is likely to be reflected when the company reports fiscal first-quarter 2018results on Aug 23.
Alibaba witnessed significant traction and growth in China and International commerce retail business. Notably, the company’s cloud business has fast emerged as a major contributor to top-line growth.
In the last reported quarter, revenues in its core commerce segment were up 62% year over year to RMB51.3 billion (US$8.2 billion).Revenues from the cloud computing segment increased 103% to RMB4.4 billion (US$699 million).
Click here to know how the company’s overall fiscal Q1 performance is expected to be.
Let's Delve Deeper
Alibaba’s core commerce segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. Innovation in data technology, widespread application of big data, and increasing validation for Taobao and Tmall portals will continue to expand revenues in this segment.
The Cloud Computing segment, which comprises Alibaba Cloud offering a complete suite of cloud services, is in top gear. Alibaba’s management remains quite positive about the cloud computing business, as more and more businesses are shifting their servers and broadband subscriptions to cloud computing technology in order to streamline costs.
Revenues from this segment have been impressive since the past few quarters. Sales growth accelerated in the fourth quarter, driven by an increase in the number of paying customers and improved revenue mix of higher valued-added services.
Lately, 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 North America and other markets. Alibaba’s cloud computing business also has a presence in India, as it continues to expand its fast-growing business unit.
Recently, the company rolled out a set of nine products based on the emerging technology of Artificial Intelligence (AI), Machine Learning (ML), and Internet of Things (IoT) to cater to the rising demand for cloud architecture and data analytics and security in the retail industry.
The products are namely Data Lake Analytics, Anti-Bot Service, Dedicated Host, Hybrid Backup Recovery, Smart Access Gateway, Elasticsearch, Apsara Stack, IoT Platform and PAI (ML platform for AI).
These products will assist the retail clients of the company to implement its “New Retail” concept in their business operations.
Given the growing position of Alibaba’s cloud business in China and aggressive international expansion strategies, we believe that cloud computing will be one of its major growth drivers in the long run.
Long-term earnings growth for Cirrus Logic, Infineon Technologies and Rambus is currently projected to be 11.1%, 7.5% and 10%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Strong Cloud Growth Propel Alibaba (BABA) Q1 Earnings?
Alibaba Group Holding Limited’s (BABA - Free Report) expanding core commerce and cloud portfolio are expected to have performed well, which is likely to be reflected when the company reports fiscal first-quarter 2018results on Aug 23.
Alibaba witnessed significant traction and growth in China and International commerce retail business. Notably, the company’s cloud business has fast emerged as a major contributor to top-line growth.
In the last reported quarter, revenues in its core commerce segment were up 62% year over year to RMB51.3 billion (US$8.2 billion).Revenues from the cloud computing segment increased 103% to RMB4.4 billion (US$699 million).
Click here to know how the company’s overall fiscal Q1 performance is expected to be.
Let's Delve Deeper
Alibaba’s core commerce segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. Innovation in data technology, widespread application of big data, and increasing validation for Taobao and Tmall portals will continue to expand revenues in this segment.
The Cloud Computing segment, which comprises Alibaba Cloud offering a complete suite of cloud services, is in top gear. Alibaba’s management remains quite positive about the cloud computing business, as more and more businesses are shifting their servers and broadband subscriptions to cloud computing technology in order to streamline costs.
Revenues from this segment have been impressive since the past few quarters. Sales growth accelerated in the fourth quarter, driven by an increase in the number of paying customers and improved revenue mix of higher valued-added services.
Lately, 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 North America and other markets. Alibaba’s cloud computing business also has a presence in India, as it continues to expand its fast-growing business unit.
Recently, the company rolled out a set of nine products based on the emerging technology of Artificial Intelligence (AI), Machine Learning (ML), and Internet of Things (IoT) to cater to the rising demand for cloud architecture and data analytics and security in the retail industry.
The products are namely Data Lake Analytics, Anti-Bot Service, Dedicated Host, Hybrid Backup Recovery, Smart Access Gateway, Elasticsearch, Apsara Stack, IoT Platform and PAI (ML platform for AI).
These products will assist the retail clients of the company to implement its “New Retail” concept in their business operations.
Given the growing position of Alibaba’s cloud business in China and aggressive international expansion strategies, we believe that cloud computing will be one of its major growth drivers in the long run.
Alibaba Group Holding Limited Revenue (TTM)
Alibaba Group Holding Limited Revenue (TTM) | Alibaba Group Holding Limited Quote
Zacks Rank & Key Picks
Currently, Alibaba carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the technology sector are Cirrus Logic, Inc. (CRUS - Free Report) , Infineon Technologies AG (IFNNY - Free Report) and Rambus Inc. (RMBS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Cirrus Logic, Infineon Technologies and Rambus is currently projected to be 11.1%, 7.5% and 10%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>