Barclays remains constructive on Alibaba, keeping an "overweight" recommendation as the brokerage projects a gradual rebound in China e-commerce through the second half of 2026 following a weaker beginning to the year. The firm points to improving revenue dynamics and clearer prospects for profitability in some of Alibaba's newer businesses even as broader consumption stays muted.
In its assessment, Barclays called out Alibaba's customer management revenue, excluding contra-revenue items, which increased 8% year-on-year. The broker said this performance broadly mirrors industry patterns, occurring against a backdrop of softened online retail demand in China. That moderation has been tied to cautious consumer spending and the diminishing effects of appliance subsidies on purchases.
Monetisation trends across the group are described by Barclays as improving, and the firm sees a clearer path to profitability for newer business lines despite the near-term headwinds facing consumption. The brokerage specifically noted that losses at Alibaba's food-delivery business have continued to narrow, and that company management has set a target of achieving profitability in that unit by fiscal year 2029.
Taken together, Barclays argues these developments support an expectation of better earnings quality and improving profitability for Alibaba over the medium term as sector conditions recover. The broker's stance reflects a view that, while demand is currently subdued, structural improvements in how Alibaba monetises services and tighter loss control in growth areas should lift earnings as the market environment normalises.
Investors should note that Barclays' outlook is conditioned on a gradual sector recovery; the brokerage flagged that near-term consumption headwinds remain a constraint. The broker's maintained overweight rating signals a preference for Alibaba within the context of its expectations for a slow rebound in China e-commerce into the latter half of 2026.
Summary
- Barclays keeps an overweight rating on Alibaba, anticipating a gradual recovery in China e-commerce through H2 2026 after a softer start to the year.
- Customer management revenue (excluding contra-revenue) rose 8% year-on-year, aligning with industry trends despite moderated online retail demand.
- Losses in the food-delivery business are narrowing, with management targeting profitability by FY29, supporting an expectation of improved earnings quality over the medium term.