Morgan Stanley has kept Alibaba (BABA) as a “top pick” ahead of the company’s late-August earnings report, even after reducing its price target on the stock. Analyst Gary Yu reiterated the call more than two weeks after lowering the target to $180 from $190.

The revised target is about 60% above Alibaba’s Friday closing price of $112.14. Morgan Stanley maintained an overweight rating on the shares, indicating that the firm still sees upside despite the lower target. The combination of a reduced target and an unchanged rating highlights the distinction between lower near-term expectations and a still-positive view of Alibaba’s longer-term setup.

Price Target Cuts Across Banks

Yu cut Morgan Stanley’s Alibaba price target in early July while leaving the overweight rating unchanged.

Other banks also reduced their targets. HSBC lowered its Alibaba target to $170 from $176 in July while keeping a buy rating on the stock.

Daiwa made an earlier adjustment on June 24, cutting its target to $175 from $200. The firm cited weak sales during China’s 618 shopping festival as a factor behind the revision, keeping Alibaba’s domestic commerce performance in focus ahead of earnings.

Cloud, AI, and Shareholder Returns in Focus

Yu tied Morgan Stanley’s continued positive view to Alibaba’s cloud infrastructure, which he described as the largest in China.

“We expect Alibaba, having the largest cloud infrastructure in China, to win share in the current evolutionary AI cycle in China,” Yu said.

Morgan Stanley also pointed to Alibaba’s cash generation, dividends, and share buybacks as supportive factors. The bank said the online regulatory environment appears to be easing and that Alibaba is positioned to benefit. Those factors matter because they give investors more than one area to assess: operating momentum in cloud and commerce, capital returns through dividends and buybacks, and the regulatory backdrop in Alibaba’s major markets.

The assessment comes as Alibaba faces regulatory pressure in Europe. On July 20, the European Commission fined AliExpress 550 million euros for breaching the Digital Services Act (DSA).

AliExpress called the fine disproportionate and has until October 20 to submit an action plan.

Alibaba shares have risen about 18% over the past month, but they remain well below their 52-week high of $192.67.

The company’s late-August earnings report will provide the next test of whether the cloud growth highlighted by Yu is developing quickly enough to support Morgan Stanley’s price target, which remains roughly 60% above the latest closing price. The report will also offer updated evidence on the demand trends behind recent target cuts and on whether shareholder-return plans remain a meaningful support for the stock.