May Online Retail GMV Grows 3%, Goldman Sachs Reiterates Buy Ratings on Alibaba and JD.com

Overview

This report is Goldman Sachs' monthly tracking of China's Internet e-commerce industry, focusing on May 2026 industry data, 618 Shopping Festival trends, and the market debate on Alibaba's recent stock weakness. The report notes that industry online retail GMV grew 3% YoY in May, with express delivery volume up 6% YoY, indicating stabilization of online consumption. Despite macro retail sales slightly below expectations, Goldman Sachs maintains Buy ratings on major e-commerce platforms (Alibaba, JD.com, Pinduoduo, Meituan) and particularly emphasizes cloud and data center as the preferred sector for H2, believing AI computing demand will drive growth in this area.

Core views

Core View One: Industry data stabilizing, with clear structural divergence. May national online retail merchandise GMV grew 3% YoY, better than April's flat performance, mainly supported by stable spending in food and apparel categories. However, affected by the high base from last year's trade-in program, home appliance and communication equipment sales fell 16% and 1% YoY respectively. Overall retail sales fell 0.6% YoY in May, slightly below market expectations, mainly dragged by jewelry, home appliances, and sports categories. Goldman Sachs modestly adjusted its 2026 full-year industry online GMV and express delivery volume growth forecasts to 5%/5%, and raised Q2 GMV and express delivery volume growth forecasts to 2%/6%. Core View Two: Addressing five market concerns about Alibaba. In response to investor concerns about Alibaba's stock weakness, Goldman Sachs analyzed each one: 1) E-commerce Customer Management Revenue (CMR) weakness: Q2 CMR revenue expected to decline slightly, but healthy parcel growth helps narrow the gap between GMV and CMR, and benign competition benefits underlying e-commerce profits; 2) AI cloud competition: Despite government plans to invest in data centers, Internet hyperscalers' first-mover advantages in capex, AI models, and chip capabilities will enable them to maintain more favorable pricing and margins in AI cloud; 3) AI model landscape: Although price competition is intense, leading models (such as Tongyi Qianwen) still have pricing power, and Alibaba's leadership in the computing layer and MaaS scale makes it a major beneficiary of AI token computing demand; 4) AI capex funding sources: Alibaba has sufficient net cash and operating cash flow to support AI investments over the next two years; 5) SOTP valuation discount: Investors prefer pure AI infrastructure or pure e-commerce plays, leading to widening valuation discounts for Alibaba, but Goldman Sachs believes its combined value is not fully reflected. Core View Three: Segment highlights. During the 618 Shopping Festival, the industry shifted toward more rational operations, with platforms simplifying promotional mechanisms, and express delivery volume grew 8% YoY from May 13 to June 14. Temu performed strongly in the US market, with May GMV up 54% YoY, but in the ASEAN region, MAU fell 30% MoM due to elimination of minimum de minimis exemptions and stricter customs requirements. In food delivery and instant retail, as antitrust investigations and Alibaba's strategic adjustments take effect, the three major players' market shares are stabilizing, subsidies are becoming more rational, and Meituan's Q2 food delivery EBIT is expected to reach near breakeven.

Analysis framework

Goldman Sachs employs a top-down and bottom-up combined analytical approach. First, by tracking macro data from the National Bureau of Statistics (NBS) and State Post Bureau (SPB), it dissects the relationship between online retail GMV and express delivery volume, identifying distortions from the trade-in policy and promotional timing. Second, using third-party data tools (such as Sensor Tower, QuestMobile, Bloomberg Second Measure), it high-frequency tracks traffic, user activity (MAU), and GMV changes for major platforms (Alibaba, JD.com, Pinduoduo, Temu) to validate macro trends. Finally, for market hotspots (such as Alibaba's AI transformation and valuation debate), it uses Sum-of-the-Parts (SOTP) valuation reconstruction, combined with capex plans and cash flow forecasts, to assess long-term investment value.

Methodology notes

• Company Fundamentals & Financial FrameworkSOTP Valuation

  SOTP Valuation Method

  Valuing different business segments (such as e-commerce, cloud, logistics) separately and summing them, then deducting a holding company discount, to more accurately reflect the value of a diversified conglomerate. Goldman Sachs used this method when evaluating Alibaba and Pinduoduo.

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Supply-Demand Framework

  Analyzing changes on the supply side (such as cloud computing capacity, express delivery capacity) and demand side (such as AI token demand, e-commerce shopping demand) to judge industry sentiment and price trends. Used in the report to analyze the AI cloud market and express delivery industry.

• Event Game Theory & Behavioral FinanceExpectation Gap/Expectation Management

  Expectation Gap Analysis

  Comparing market consensus expectations with company actual performance or institutional forecasts. The report notes that May retail sales were below Bloomberg consensus, thereby adjusting short-term expectations for related companies.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Alibaba (09988.HK/BABA)

  Benefits: AI cloud business growth and MaaS scale expansion; Hurt: Short-term e-commerce CMR weakness

  Strengths

  Cloud computing leadership, sufficient cash flow to support AI investment, MaaS business growth

  Weaknesses

  Slowing growth in core e-commerce business, large SOTP valuation discount

  Comparison

  Compared to pure e-commerce companies, it has stronger AI infrastructure attributes; compared to pure cloud vendors, it has richer application scenarios

  Risks

  Sustained CMR weakness, cloud revenue growth deceleration, AI investment returns below expectations

• JD.com (JD)

  Benefits: H2 profit recovery, fading base effects from home appliance trade-in program

  Strengths

  Supply chain advantages, stability of self-operated business, improving YoY base after Q2

  Weaknesses

  Q2 electronics and home appliance revenue expected to fall 8%, short-term pressure

  Comparison

  Compared to Alibaba and Pinduoduo, JD.com focuses more on experience and supply chain, with higher certainty of profit recovery

  Risks

  Intensifying competition, execution failure, margin volatility

• Pinduoduo (PDD)

  Benefits: Temu US GMV high-speed growth

  Strengths

  Temu's strong growth in US market, stable domestic main site

  Weaknesses

  ASEAN market heavily impacted by tariff policies, lack of segment disclosure

  Comparison

  Fastest internationalization pace, but faces greater geopolitical risks

  Risks

  Geopolitical headwinds, intensifying competition, reinvestment affecting margins

• Meituan (3690.HK)

  Benefits: Rationalization of food delivery market competition, narrowing losses

  Strengths

  Dominant position in food delivery market, instant retail growth, UE improvement

  Weaknesses

  New business investments may affect short-term profits

  Comparison

  Has absolute advantage in food delivery and instant retail, profit inflection point has arrived

  Risks

  Competition deterioration, rising labor costs, regulatory risks

Key data

• May Online Retail Merchandise GMV Growth+3% yoyImproved from April's flat growth
• May Express Delivery Volume Growth+6% yoyApril was +3%
• May Overall Retail Sales Growth-0.6% yoyBelow Bloomberg consensus of -0.2%
• Temu US May GMV Growth+54% yoyBased on Bloomberg Second Measure data
• 2026E Industry Online GMV Growth Forecast5%Essentially unchanged
• Alibaba 2026E P/E Ratio15xEPS revisions bottoming out

Impact & implications

The report believes that despite short-term challenges from CMR growth slowdown and macro consumption weakness, the long-term logic of China's Internet giants is shifting toward AI and cloud computing. For Alibaba, the accelerated growth of its cloud business and MaaS (Model-as-a-Service) recurring revenue trend are the main upside drivers. For JD.com, Q2 may be the most difficult quarter for YoY comparisons, with revenue and profit recovery expected in H2. For Pinduoduo, Temu's growth momentum in the US is strong, but geopolitical and tariff policy risks need attention. Overall, the cloud and data center sector is preferred due to the explosion in AI computing demand, while the e-commerce sector awaits margin recovery.

Risks

• Macroeconomic growth below expectations leading to weak GMV growth
• Intensifying competition among e-commerce platforms affecting monetization rates and margins
• Geopolitical risks affecting overseas businesses such as Temu
• AI capex returns below expectations
• Regulatory policy changes (such as antitrust, tariff policies)

What to watch

• Alibaba Cloud revenue acceleration and MaaS recurring revenue trends
• JD.com's revenue and profit YoY recovery after Q2
• Temu's market expansion outside the US and tariff policy impacts
• Subsidy intensity and market share changes in food delivery and instant retail market
• Sustainability of AI computing demand and cloud vendors' capex pace