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    Is Alibaba Group Holding (BABA) Undervalued After Its Moonshot AI Cloud Deal?

    Simply Wall St·08/02/2026 22:23:27
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    Alibaba Group Holding (NYSE:BABA) is back in focus after reports of a major cloud deal supplying Moonshot AI with computing power equivalent to about 20,000 Nvidia chips. This development is drawing investor attention to its AI exposure.

    See our latest analysis for Alibaba Group Holding.

    Alibaba Group Holding's share price has reacted strongly to the Moonshot AI headlines, with a 1-day share price return of 5.10% and a 30-day share price return of 24.76%. However, the year to date share price return is down 21.50% and the 5-year total shareholder return is down 33.91%. This suggests short term momentum has picked up while longer term performance remains under pressure.

    If this kind of AI driven move has your attention, it could be a good moment to see what other AI focused companies are doing and check out 33 AI small caps

    Bulls see Alibaba Group Holding as an underpriced AI and cloud platform after the Moonshot deal. Bears point to regulatory risk and mixed long term returns. Which side do the current valuation numbers support?

    Most Popular Narrative: 17.1% Undervalued

    Alibaba Group Holding's most followed narrative points to a fair value of $147.49 versus the last close at $122.25, which is a meaningful gap the market is still debating.

    Alibaba is currently in a aggressive transition phase, prioritizing long-term growth over short-term profits. The company is heavily investing in two key areas: AI (with its "Qwen" assistant) and instant commerce (Taobao Flash Sales).

    Read the complete narrative.

    This narrative does not hinge on small tweaks. It leans on rapid AI related revenue expansion and a big shift in Alibaba Group Holding's cash flow profile. Curious which growth and margin assumptions sit underneath that $147.49 fair value.

    According to MatthewLi, the fair value estimate applies a specific discount rate to Alibaba Group Holding's future cash flows and leans on ongoing revenue growth and profit margins that support an AI first, instant commerce heavy model. The result of that work is a fair value of $147.49 compared with the current share price of $122.25.

    Result: Fair Value of $147.49 (UNDERVALUED)

    Have a read of the narrative in full and understand what's behind the forecasts.

    However, Alibaba Group Holding still faces real risks, including ongoing regulatory scrutiny in China and pressure on margins from heavy AI and instant commerce investment.

    Find out about the key risks to this Alibaba Group Holding narrative.

    Next Steps

    Given the mix of optimism and concern around Alibaba Group Holding, it makes sense to check the underlying data yourself and decide quickly where you stand. To see what is currently getting investors most optimistic, take a closer look at the 4 key rewards

    Looking for more investment ideas beyond Alibaba Group Holding?

    If you are serious about putting this AI story in context, use the Simply Wall St Screener to compare Alibaba Group Holding with other opportunities across the market.

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.