Alibaba Stock Price Forecast - BABA Stock at $154: AI Cloud Surges 34% While Instant Commerce Explodes

NYSE:BABA: AI hyperscaler trading at a mid-20s multiple

Price action and valuation snapshot for NYSE:BABA

Alibaba Group Holding Ltd (NYSE:BABA) (real-time chart) trades around $154–155, down roughly 1% on the day after slipping $1.53 from a prior close near $156.26. Intraday, the stock has moved between $153.70 and $155.84, against a 52-week range of $80.06–$192.67, putting it in the middle of a very wide recovery band.
On fundamentals, NYSE:BABA carries a trailing P/E around 20–21x and a forward P/E in the mid-20s, with a dividend yield between 0.68% and ~1.3% depending on which period you use. Market cap sits in the $348–370B range, and consensus 3-year EPS growth sits around ~9% CAGR (EPS from about $9.01 to $11.87 by FY2028).
So the market is valuing a business with double-digit underlying growth and a structurally important AI cloud franchise at something close to a mature platform multiple, not a high-conviction AI leader.

Revenues: from misleading 5% print to real ~15% growth

Headline revenue for the September quarter was about $34.808B, up only 5% YoY. That looks pedestrian versus historic NYSE:BABA growth, but the print is distorted by disposals like Sun Art and Intime.
Adjusting for those divestitures, underlying revenue growth is closer to 15% YoY, and all three major operating blocks – Alibaba China E-commerce Group, Alibaba International Digital Commerce Group, and Cloud Intelligence Group – delivered double-digit growth.
China e-commerce grew roughly 16% YoY, international digital commerce around 10% YoY, while cloud surged ~34% YoY. The quarter also beat top-line expectations by a clear margin. The picture is simple: the reported 5% growth severely understates what the current configuration of NYSE:BABA is producing.

Cloud Intelligence Group: core AI and hyperscale engine of NYSE:BABA

Cloud is the core strategic asset now. In the most recent reported quarter, Cloud Intelligence Group revenue grew about 34–34.4% YoY, an acceleration from ~26% in the June quarter and from single-digit growth a year earlier.
Within that, AI-related cloud revenue continued to grow at triple-digit rates, and has done so for multiple consecutive quarters. Cloud EBITA margins have moved from about -4.6% in FY2019 to roughly 9% now, even while Alibaba is spending heavily on AI R&D and global data center roll-outs.
Market position data is equally important. In China, Alibaba Cloud holds roughly 35.8% of the AI cloud market, the largest share. Frost & Sullivan data in the source material shows the Qwen family of large language models at around 17.7% of enterprise-grade AI usage in China, ahead of Doubao (ByteDance) at 14.1% and DeepSeek at 10.3%.
On top of that, at end-October 2025, more than 180,000 derivative models had been built on HuggingFace on top of Qwen, signaling massive developer adoption. That is exactly what you want from a hyperscaler: a self-reinforcing ecosystem where developers build on your stack because of tooling, performance, and installed base.
Management has committed around RMB 380B (≈$53B) over three years to cloud and AI infrastructure. That figure is larger than Alibaba’s total AI and cloud spend over the prior decade. The investment is targeted at regions including LatAm, EU, wider Asia, and the Middle East, not just China or Southeast Asia, which positions NYSE:BABA as the preferred non-US cloud option in many jurisdictions that want diversification away from purely US-centric providers.

AI ecosystem: Qwen, devices, and 3D services extend BABA’s reach

The AI strategy is not just infrastructure and APIs. NYSE:BABA is deliberately pushing AI out into consumer and small-business touchpoints.
On the device side, Alibaba has launched Quark AI glasses in China, its first consumer wearable built on a multimodal AI model. That moves Qwen from an abstract cloud model into a physical object users wear, which is strategically important for usage data, habit formation, and ecosystem lock-in.
On the software and local services side, AutoNavi / Amap is introducing tools which let restaurant owners upload photos or videos and automatically generate 3D restaurant visuals, directly targeting Meituan’s turf. This kind of tool converts AI capabilities into revenue-linked products: better visuals → higher engagement → more bookings → higher ad spend.
Combine that with AI coding assistants and enterprise applications running on Qwen inside Alibaba Cloud, and you get a full stack:
Models (Qwen) → Cloud infrastructure → Enterprise AI services → Consumer edge devices (Quark) → Local services (Amap 3D).
Very few players – even globally – control as many layers of that stack as NYSE:BABA does in China and adjacent markets.

China e-commerce and instant commerce: revenue acceleration vs margin collapse

The pressure point is not top-line growth but profitability in the domestic commerce engine.
In the Alibaba China E-commerce Group, adjusted EBITA margins have fallen to about 7.9% in FQ2’26, down roughly 19.5 percentage points QoQ, 30.7 points YoY, and more than 34 points from ~42.1% in FY2019. Group-wide adjusted EBITA margin is about 3.6%, down 12 points QoQ, 13.5 points YoY, and nearly 25 points from ~28.3% in FY2019.
The reason is straightforward: aggressive spending on instant commerce / quick commerce to protect and grow share against local competitors. Quick commerce revenue reached about $3.21B, up 55.8% QoQ and 59.9% YoY, now roughly 17.2% of China e-commerce revenue (up 6.7 points QoQ and 4.8 points YoY).
So management is sacrificing near-term margins to cement dominance in a segment that is gaining share in consumer behavior. That is exactly the kind of trade-off that compresses earnings ratios in the short term and creates operating leverage later, if executed correctly. For now, it explains a large part of the volatility you see in NYSE:BABA around earnings prints.

Profitability, expenses and cash flows: short-term pain is deliberate

Income statement optics are ugly, but the drivers are clear.
Operating income is down around 85% YoY, adjusted EBITDA down roughly 78% YoY, and adjusted EPS around $0.61, off about 71% YoY. The drag is coming from elevated Sales & Marketing spending and investment in user experience and technology, particularly tied to quick commerce and core marketplace upgrades.
On the expense mix, G&A as a share of revenue has improved, but most other line items have expanded as a percentage of sales. Management is consciously over-investing into growth vectors rather than defending near-term earnings per share.
The cash flow statement tells the same story. Operating cash flow for the September quarter dropped to about $1.419B, down ~68% YoY, and free cash flow was a negative $3.068B due to the combination of quick commerce investment and cloud CAPEX. For the first half of FY26, net cash provided by operating activities sits around $4.32B, down 52.7% YoY.
The key judgment call: these are largely choice-driven compressions – growth CAPEX and offensive spending – not structural deterioration in the economic engine. If management pulled back on instant commerce, marketing, and some cloud build-out, EPS and FCF would rise quickly. They are not doing that, which tells you they see the window for land-grab as more important than smoothing margins.

Buybacks, balance sheet, and capital allocation discipline

On capital return, NYSE:BABA has pulled back. Share repurchases have been trending down even though the company still has roughly $19.1B authorized for buybacks. The reason is simple: cash flow has tightened because of the investment cycle.
Given operating cash flows of $1.4B in the quarter and a -$3.1B free cash flow print from capex and growth spending, management is clearly prioritizing internal investment over retiring shares at current prices. That frustrates some shareholders but is consistent with a long-term AI and commerce grab.
At the same time, the balance sheet is strong. Cash and liquid investments are around $80.61B, up about 2% YoY and nearly 180% higher than FY2019 levels. Debt risks are far lower than for some US hyperscalers that have leaned heavily on leverage.
So the company can fund RMB 380B in AI/cloud spending and expansion while keeping optionality on buybacks. When FCF normalizes, there is ample authorization capacity to re-accelerate repurchases. For investors wanting to monitor behavior and any insider positioning, the relevant detail sits in the insider and profile pages (stock profile / insiders).

Relative valuation: NYSE:BABA vs global megacap peers

Valuation is where the opportunity emerges.
Using one set of figures in the materials, forward P/E non-GAAP is about 23.6x, close to pre-pandemic 5-year means around 28.2x, and above the more depressed 1-year mean near 15–16x and 5-year mean near 13.8x that reflect the China risk discount.
If you instead look at the stock price around $155.74 and FY2025 adjusted EPS of $9.01 (up ~5% YoY), NYSE:BABA is trading at about 17.3x FY25 EPS. Projected EPS climbs to $11.87 by FY2028, implying ~9.2% EPS CAGR over three years. That gives a 3-year PEG ratio around 1.87x.
Compare that to major peers using the same method:
AMZN around 1.63x PEG
MSFT around 1.67x PEG
GOOG around 1.75x PEG
MELI around 1.65x PEG
JD around 3.16x PEG
On that basis, NYSE:BABA is not screamingly cheap, but for a company with:
Mid-teens underlying revenue growth

30% cloud growth with 9% cloud margins
Triple-digit AI revenue growth
A dominant domestic commerce platform and growing international exposure
…it is not being priced as an AI flagship. A mid-teens to high-teens earnings multiple with that asset mix is conservative relative to the global AI and cloud cohort.

Technical structure and trading pattern in NYSE:BABA shares

Technically, NYSE:BABA has been trading in recognizable cycles since the January 2024 bottom. The stock recently hit new 52-week highs near $192, then retraced back towards a December 2025 floor around $147, bouncing off that level twice. That behavior suggests the floor is technically relevant support.
Indicators in the source material show RSI in oversold to neutral zones during the latest pullback, with volumes consistent with a corrective phase rather than capitulation. The bounce from the high-140s into the mid-150s fits a pattern of multi-month up/down cycles that have repeated four times already.
In other words, the current setup looks like a dip within an uptrend, with price consolidating between roughly $147–$192. Breaking convincingly above the high-$190s would likely require either clearer margin recovery or another leg of positive AI/cloud surprises.