JPMorgan Chase has significantly raised its target price for Alibaba from $170 to $245, corresponding to an increase in the Hong Kong stock price to HKD 240. Key points of Xiaomo Research Newspaper: As Alibaba's narrative has shifted from "losing market share of domestic e-commerce" to "front-line assets of China's Internet", the positive development of cloud business and domestic e-commerce in China means that valuation multiples should rise. 1. The finishing touch: the flywheel effect of "Token ->commission rate". The AI flywheel is the soul of the entire report. We used to worry about what to do if Alibaba's e-commerce monetization rate (commission rate) reached its peak? Xiaomo has proposed a new growth logic: driven by AI! This flywheel rotates like this: Alibaba Cloud provides powerful AI tools for merchants (such as content generation and customer service robots) ->Merchants use these tools to reduce operating costs, increase conversion rates and advertising ROI (return on investment) ->Merchants earn more money and are more willing to invest in advertising and buy services on the Alibaba platform ->Ultimately, Alibaba's advertising revenue and commission (i.e. commission rate) increase. This logic perfectly transforms AI's "computing power consumption (Token)" into a tangible "real money (commission rate)" for e-commerce business. This is a self reinforcing positive cycle and the core factor that motivates Xiaomo to significantly increase its valuation. 2. The story has changed, and the valuation should also change! Alibaba's market narrative has undergone a fundamental shift. From "share loser" to "front-line core asset": The report clearly points out that Ali's positioning should be changed from "domestic e-commerce market share loser" to "China's Internet front-line asset". This means that it should enjoy the same valuation premium as core assets such as Tencent. Target price of $245: The new target price is based on a 15 times expected price to earnings ratio for the 2028 fiscal year. Xiao Mo believes that due to short-term investments in food delivery, flash sales, and other businesses, the profits of the 2027 fiscal year will be distorted. Therefore, investors should take a longer-term view and directly look at the 2028 fiscal year, when Alibaba will be the "complete entity". 3. The AI wave in China is faster and more intense than you imagine. Xiaomo believes that the adoption speed of generative AI by Chinese enterprises will far exceed the previous wave of SaaS. Almost all corporate functions can be empowered by AI, and the "pool" of value creation is bottomless. At the same time, Alibaba's full stack strategy of "full stack+openness" is expected to disproportionately capture value in IaaS (infrastructure), PaaS (platform), and application layers. It has both ultra large scale cloud and self-developed chips, as well as rapidly iterating generic models, and the largest AI model community in China. In addition, various tools (Antelope, Zaodian, Tongyi Qianwen 3-Omni) have helped businesses save time, shorten shelf life, increase click through rates, and GMV conversion rates. I have been optimistic about Alibaba since the beginning of the year, and around July 120, I shouted that Alibaba was undervalued, which can be considered successful on Alibaba.