In interesting news on Hong Kong stocks, Alibaba Group Holdings (HK:9988) (NYSE:BABA) has announced massive discounts on its Alibaba Cloud core products to win customers amidst intense competition. The Chinese e-commerce giant is offering price cuts of an average of 20% and up to a maximum of 55% on more than 100 products across its cloud division, effective today. 9898 shares dipped 1.8% on the news.
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Alibaba Leverages Discounts to Attract Customers
Alibaba’s price cuts are being offered on its elastic compute service, object storage service, and database product categories. The aggressive discounts are expected to lure back customers lost to rivals like Tencent Holdings (HK:0700) and Baidu (HK:9888), as well as emerging players. This is the second time in a year that Alibaba is engaging in a massive price cut drive. The first one was announced in April 2023 and ranged from 15% to 50% on the core products.
Alibaba’s Cloud unit has witnessed slowing revenue growth owing to intense competition. In the results for the December quarter, Alibaba Cloud registered a modest 3% year-over-year rise in revenues to RMB28.1 billion. Notably, Alibaba’s first attempt at listing the Alibaba Cloud Intelligence Group unit hit a pause due to the U.S. chip export ban and weak capital markets.
Alibaba Cloud is betting big on the generative AI (artificial intelligence) drive, as companies building Gen AI applications depend on cloud computing platforms to train their AI models. As one of the largest cloud service providers in the mainland, Alibaba aims to make its services more affordable for customers and accelerate the adoption of advanced cloud services. Only time will tell how Alibaba’s price-cutting mechanism is incentivizing more developers to utilize its cloud computing platform to build their AI models and applications.
What is the Future of Alibaba Stock?
On TipRanks, 9988 stock has a Moderate Buy consensus rating based on four Buys and two Hold recommendations. The Alibaba Group Holdings share price target of HK$100.87 implies 35.8% upside potential from current levels.
