AliCloud's valuation of $39 billion is close to the market value of Paypal and Baidu
American VPS Morgan Stanley, one of the largest investment banks, released a research report that Alibaba Cloud, Alibaba's cloud computing subsidiary, is rising rapidly, with a valuation of up to $39 billion, surpassing the valuation of AirBnb and Didi, and approaching the market value of Paypal and Baidu.
The bank estimated that Alibaba Cloud's revenue would exceed US $18.5 billion in the next five years, with considerable revenue and profit prospects. As a result, Alibaba's target share price was raised from US $119.3 to US $130.6, driving Alibaba's share price up for two consecutive days by more than 5%.
Morgan Stanley said in the report that both Alibaba's e-commerce platform and its affiliated company Ant Financial have achieved economies of scale and profitability within seven to ten years. Alibaba Cloud, which has been established for seven years this year, has also reached the profitability point, and is expected to maintain a rapid revenue growth in the next three years.
Analysts predict that by the fiscal year 2020, Alibaba Cloud will become one of the most important revenue pillars of Alibaba Group and the third growth pole after e-commerce and payment.
Alibaba Cloud, founded in 2009, is one of the first cloud service providers in China to open up the cloud computing market. Morgan Stanley said that with its leading, self-developed and cost-effective cloud computing technology, Alibaba Cloud will continue to expand its advantages in the Chinese market. It is estimated that by the end of fiscal year 2019, Alibaba Cloud will have a 58% market share in China.
In the international market, the revenue gap between Alibaba Cloud and Amazon AWS will also continue to narrow. Morgan Stanley estimates that Alibaba Cloud will maintain a compound annual growth rate of more than 89% in the next three years, with a revenue of 58 billion yuan in fiscal year 2020 and 120 billion yuan (about 18.5 billion dollars) in fiscal year 2022, thus reducing the revenue gap with Amazon from five years to 3.5 years.
According to the report, Alibaba Cloud has three major advantages: its unquestionable leadership in the Chinese market, the rapid growth of the number of paying users and the broad space for product realization. Morgan Stanley said that China's IaaS cloud computing market will reach a market size of $7.8 billion by 2018 - maintaining a compound annual growth rate of 135% in the next three years - and Alibaba Cloud will benefit from the rapid growth of the Chinese market.
In addition, Alibaba Cloud officially launched a one-stop platform for big data at the beginning of this year. Morgan Stanley believes that the realization of Alibaba Cloud's big data products is still at an early stage, with considerable future revenue and profit margins.
Compared with the rapid growth of Alibaba Cloud, Morgan Stanley gave AWS a CAGR of 46%, while Oracle only gave 0%, far below the industry median of 9%.
