Alibaba Group Holding Ltd’s BABA results for the fourth quarter of fiscal 2022, due on May 26, are expected to reflect the strengthening impact of the cloud computing space.
Additionally, this segment has proven to be one of the major contributors to the company’s overall revenue growth. In the most recent quarter, cloud computing revenue rose 20% year over year to 19.54 billion yuan ($3.1 billion), accounting for 8% of total revenue.
The Zacks Consensus Estimate for cloud computing segment revenue for the fiscal fourth quarter was pegged at $3.13 billion, up 22.5% from last year’s reported number.
Factors to Consider
Alibaba’s growing presence in the booming cloud market could be encouraging.
The company’s cloud computing business has gained strong traction in both China and international regions. A strengthened global data center network should have a positive impact on the reported quarter.
The company has seen strong momentum in the Asia-Pacific region over the past few quarters. This trend is likely to continue this quarter.
Rising spending by enterprise customers, driven by the company’s continued efforts to add features to its cloud offerings, likely drove the segment’s revenue growth in the fiscal fourth quarter.
Alibaba strong portfolio of cloud services, powered by advanced technologies such as artificial intelligence, machine learning and the Internet of Things, is said to help meet the growing demand for cloud architectures.
It is expected that the development momentum of the company’s cloud computing, which allows users to enjoy unlimited computing resources anytime and anywhere, has attracted the attention of customers.
The company’s hybrid cloud partner program has garnered significant attention, the impact of which is expected to be reflected in upcoming results.
Zack rankings and stocks to consider
Alibaba currently has a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector might consider some higher-rated stocks such as Avnet AVT, Monolithic Power Systems MPWR, and MaxLinear MXL. While Avnet and Monolithic Power Systems have a Zacks Rank #1 (Strong Buy), MaxLinear currently has a Zacks Rank of 2 (Buy). You can view the full list of today’s Zacks #1 Rank stocks here.
Avnet rose 4.5% last year. AVT’s long-term earnings growth rate is currently projected at 37.2%.
Monolithic Power Systems rose 28.4% last year. MPWR’s long-term earnings growth rate is currently projected at 25%.
MaxLinear is up 7.5% over the past year. MXL’s long-term earnings growth rate is currently projected at 20%.
Stay informed about upcoming earnings announcements with the Zacks Earnings Calendar.