Investors are bracing for earnings from Alibaba and Zscaler, two companies that offer a read on consumer demand in China and corporate cybersecurity budgets. The reports, due this week, could sway sentiment across e-commerce, cloud computing, and security software. The attention reflects questions about China’s recovery and whether security spending remains resilient after a year of tight IT budgets.
“IBD’s Alexis Garcia and Ed Carson preview key upcoming earnings reports from Alibaba and Zscaler.”
The stakes are high for both names. Alibaba remains a barometer for China’s digital economy. Zscaler is a bellwether for zero-trust security, a model that routes traffic through cloud gateways to secure users and apps.
Backdrop: Two Markets, One Test
Alibaba has navigated regulatory scrutiny, a multiyear restructuring, and uneven domestic retail trends. It has also pushed further into cloud services and artificial intelligence, aiming to reignite growth. Competition has intensified in value-focused shopping, pressuring margins and market share in some categories.
Zscaler, meanwhile, has benefited from the shift from hardware firewalls to cloud security. Many enterprises are consolidating tools to cut costs and improve controls. That has helped larger platforms, but also intensified rivalry among top vendors. Zscaler competes with Palo Alto Networks, CrowdStrike, and Microsoft in key accounts.
Both companies enter earnings with investors focused less on the past quarter and more on guidance. Clear signals on demand, pricing, and pipeline quality could set the tone for the next few months.
Alibaba: Cloud And Commerce In Focus
For Alibaba, traders will watch its China commerce segment for signs of steady orders and buyer growth. Any color on consumer promotions or discounting will matter for margins. International commerce, including cross-border efforts, is another swing factor as competition heats up globally.
Cloud remains a core debate. Growth slowed in recent years as large customers optimized spending. Investors will look for evidence that AI workloads and enterprise wins are offsetting the drag from optimization. Commentary on training and inference demand could help frame the outlook.
Management’s capital plans are also in view. After past shifts in portfolio strategy, clarity on investment priorities and buybacks could support the stock.
Zscaler: Demand Signals And Deal Quality
Zscaler earns revenue by securing access to apps and the internet for distributed workforces. Its results often hinge on billings, large deals, and federal momentum. Deal timing, especially in the public sector and Fortune 500 accounts, can swing quarterly numbers.
Key checks for investors include pipeline growth, win rates in competitive bake-offs, and attach rates for add-on modules. Margin expansion from scale and efficient go-to-market will also be scrutinized. Any update on platform consolidation trends, where customers replace legacy tools with fewer vendors, could shape expectations for the second half of the fiscal year.
What Investors Will Watch
- Guidance for revenue, margins, and free cash flow.
- For Alibaba: cloud growth, e-commerce margins, and competitive pressures.
- For Zscaler: billings trajectory, federal demand, and large deal closures.
- Signals on AI spending and security consolidation.
- Management tone on macro risks and currency effects.
Market Impact And Scenarios
A stronger-than-expected report from Alibaba could ease concerns about China’s consumer health and revive interest in large-cap Chinese tech. Weakness, especially in cloud or margins, may renew questions about competition and growth durability.
For Zscaler, upside in billings and guidance would support the view that security remains a top IT priority. A softer outlook could revive worries about deal scrutiny and budget fatigue. Peer moves often follow, given the sector’s tendency to trade on read-throughs.
Analysts also warn of heightened volatility around both prints. Options markets often price wide moves for these names, reflecting uncertainty on guidance and macro headlines.
As earnings land, the market will look for clear messages on demand and profitability. Alibaba’s update should show whether cloud and international commerce can pick up the slack from discount-heavy retail. Zscaler’s report will test the strength of zero-trust adoption and large enterprise budgets. The next cue comes from guidance and management commentary. Watch for how each company frames AI, platform strategy, and spending discipline as they set the path for the coming quarters.
