Alibaba must expand its presence beyond China and Southeast Asia, according to Gil Luria, director of research at D.A. Davidson.
Alibaba, Luria says, could hit saturation any time with more than 750 million active users in China.
The company could be seeing opportunities in lower-tier Chinese cities, but Luria mentioned that aside from tight competition, the markets there are not as rich as the top-tier cities.
“Their growth is going to have to come from outside of China,” he told CNBC’s “Squawk Box Asia." “For them to sustain the levels of growth they have right now, with China approaching saturation, Southeast Asia is only going to carry them for so long before they have to get into some of those other markets in order to sustain this growth," he added.
Latin America and Africa are among the potential growth markets for Alibaba. The eCommerce giant has already established its presence in Southeast Asia through the e-commerce platform Lazada, in which it owns a majority stake.
The major source of revenue for Alibaba is its China retail marketplaces that include shopping platforms like Tmall and Taobao and its online-to-offline grocery chain.
Cloud computing business
Finance chief Maggie Wu said that Alibaba is optimistic about its cloud computing business in the current fiscal year.
In a 2018 interview, current chairman and CEO Daniel Zhang told CNBC that Alibaba cloud computing business could become its “main business” someday.
On Wednesday, Zhang said in a speech that the technology is a “growth engine” but noted that the world is in a “nascent stage of the global cloud era.”
According to the Alibaba CEO, cloud computing is “the kind of opportunity that comes only once in a generation.”
Meanwhile, Alibaba’s CFO Wu said its Cainiao logistics arm aims to turn operating cash flow positive in the current fiscal year.
Cloud computing is considered one of Alibaba’s fastest-growing businesses in recent years as has expanded to Europe and Asia. In the June quarter, revenue from cloud computing increased by 58.5% to 12.35 billion yuan ($1.75 billion). However, it remains to account for 8% of Alibaba’s total revenue.
Data from Synergy Research showed that Alibaba is the second-largest cloud computing player by revenue in the Asia-Pacific region, behind Amazon, but it is number one in China.
Last year, Alibaba announced its plan to raise up to $13.4 billion through the issuance of shares in Hong Kong.
The plan of Alibaba for a secondary listing in Hong Kong to raise $13.4 billion for its continued expansion into online travel, delivery and media represents the company’s vote of confidence in the territory which has been affected by months of civil unrest.
In 2014, the company founded by billionaire Jack Ma raised $25 billion in its initial public offering (IPO) on the New York Stock Exchange (NYSE), setting the record for the largest IPO in history.
In terms of social responsibility, Alibaba has done several efforts to extend help to those who are hit by the pandemic.
Billionaire Joe Tsai, who co-founded Chinese e-commerce giant Alibaba, has donated ventilators and masks to New York to help with the coronavirus pandemic.
He and his wife, Clara Wu Tsai, donated 2.6 million masks, 170,000 goggles and 2000 ventilators to the state of New York, which is considered the epicenter of the coronavirus outbreak in the US.
In an interview, Clara Tsai said: “We kept hearing cries for (personal protective equipment) from our community and wanted to help.” She explained that the state will allocate the second shipment but “it’s our intention to help the most underserved institutions.”
