Alibaba Plans $1B Cloud Investment in Asia Pacific

Alibaba (BABA), through its cloud computing unit, Alibaba Cloud, plans to invest $1 billion across the Asia Pacific region over the next three years. This marks Alibaba’s largest investment allocation in the current fiscal year. The investment is intended to support talents and startups across the region.

“We are committed to bettering the region’s cloud ecosystem and enhancing its digital infrastructure,” said Alibaba Cloud Intelligence President Jeff Zhang.

Alibaba Cloud officially launched its third data center in Indonesia. It plans to launch its first data center in the Philippines by the end of 2021 and set up an innovation center in Malaysia.

Alibaba’s cloud unit serves customers globally. It ranked first in Asia Pacific and third worldwide in the global Infrastructure-as-a-Service market, according to an April report by Gartner. Alibaba Cloud became profitable during the December quarter. Its revenue grew 37% year-over-year to about $2.56 billion during the March 2021 quarter. (See Alibaba stock analysis on TipRanks)

The cloud unit secured a worldwide partnership with the International Olympic Committee until 2028. It is helping with digital solutions to make the Tokyo Olympic games coming later this year widely accessible during the pandemic.

Susquehanna analyst Shyam Patil recently reiterated a Buy rating on Alibaba stock with a price target of $350. Patil’s price target implies 62.17% upside potential. The analyst noted that despite regulatory concerns, Alibaba still has a large growth opportunity ahead and recent results showed sustainable execution.

Consensus among analysts is a Strong Buy based on 25 Buys and 1 Hold. The average analyst price target of $301.60 implies 39.75% upside potential to current levels.

BABA scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.