Alibaba shares increasing power. Can the momentum of stocks continue? | Motley fool

Alibaba (Baba 2.69%) The shares jumped after the Chinese company continued to show signs of turnover, led by strong growth in the segment of electronic trading and cloud computing. The shares are now almost 60% of this writing.

Let’s take a closer look at the latest earnings and future alibaby prospects so that the shares of power can continue.

Have an excite

Alibaba’s Cloud Computing Business Gobbed subtitles as returned to grow up to 26% in quarter to get nearly $ 4.7 billion. Growth was powered by artificial intelligence (AI), while the AI ​​product more than doubled after the eighth direct quarter. Meanwhile, the eBita segment (income before interest, taxes and amortization) also increased by 26% to $ 412 million.

The company emphasized a new partnership with SapWhere SAP customers will be able to run their system on Alibaba infrastructure. It is also currently developing a new AI chip specifically designed for derivation. Alibaba plans to invest an incredible $ 53 billion in artificial intelligence over the next three years.

While his efforts were focused on the fact that the company in the field of electronic trading is remodeling its great business. This is unlike his American counterpart, AmazonWhose Amazon (AWS) web services have become a big deal according to profitability. The two main Alibaba platforms are two main electronic trading platforms eBay Without auction format.

Electronic Alibaba Electronic Trading has been in the press in the last few years due to growing coexistence and a weak Chinese consumer. However, the company has invested aggressively to help increase its gross value of goods (GMV), and then added a new fee for software service and marketing tool AI, Quanzhanti to lead to profit return and growth.

This paid off in the quarter, and its electronic trading segment grew by 10% year -on -year to $ 19.6 billion. His income from third -party business also increased by 10%, while his fast trade returned by 13%. However, its investment in fast trade weighed EN, with EBITA segment decreased by $ 21% to $ 5.4 billion. His Premium 88VIP membership has again increased by two -digit digits, which overcame 53 million désmbers.

Alibaba makes a large investment in fast trade or “immediate trade” where buyers can get an item from their platform Taobao supplied in an hour or less. Monthly active users for this segment have already reached 300 million, which is 200% since April. He stated that the introduction of the service led to a 20% increase in Tabo Daily users and led to a large increase in the average purchase of users. Now its TMALL supermarket store is moving to a fast trade model.

The company’s international segment (AIDC), which includes Aliexpress, also had a strong quarter. Revenue jumped by 19% to $ 4.9 billion. Importantly, its EBITA segment cost $ 8 million, a huge improvement than much greater losses that have been experience in the past quarters.

Overall, Alibaba returned by 2% to $ 34.6 billion, the goal increased by 10% after the provision was excluded. The modified EBITA dropped by 14% to $ 5.4 billion, while its modified profit on the US deposit share (ADS) dropped by $ 10% to $ 2.06.

Its operating cash flow fell by $ 39% to $ 2.9 billion, while its free cash flow was a drain of $ 2.6 billion because it invested a significant amount in the data center infrastructure.

Alibaba ended a quarter with $ 52.3 billion in cash and short -term investments and a debt of $ 32.3 billion. She also had $ 51 billion in capital and other investments.

Is shares still buying?

While its total number was nothing to write about, powerful electronic trade and cloud computu Alibaba’s dynamics were enthusiastic about investors. Society is obviously becoming one of the leaders in Chinese AI and the introduction of a new AI chip to conclude could even more help strengthen its status.

While his electronic trading business begins to regain traction, the company also invests SR, even if it weighs profitability, if it can lead to long -term growth and give the company an advantage in the competition of the Chinese landscape of electronic trading, it will be the right step. Meanwhile, his business AIDC has made great progress to profitability in the quarter, which should make the future profitability growth well.

When the shares turn to the award, it trades the ratio to the award price for earnings (P/E) approximately 13 times the estimates of analysts 2026. This is still quite broken, despite the powerful performance of the shares this year.

Due to the growing momentum of AI AIBA, turnover of electronic trading, fast business investments and improving AIDC profitability, I think the shares still like a solid purchase in the current award.