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    Assessing Alibaba Group Holding (NYSE:BABA) Valuation as AI Investments and Cloud Expansion Accelerate

    Simply Wall St·12/25/2025 01:30:21
    語音播報

    Alibaba Group Holding (NYSE:BABA) is back in the spotlight after a flurry of AI focused moves, from massive accelerator orders with global chipmakers to new multilingual models and agent platforms rolling out across its ecosystem.

    See our latest analysis for Alibaba Group Holding.

    All of this AI momentum is landing against a backdrop where Alibaba’s share price has pulled back, with a 1 month share price return of negative 6.6% and a 3 month share price return of negative 14.5%. At the same time, its year to date share price return of 76.7% and 1 year total shareholder return of 78.4% show that longer term momentum is still firmly intact despite some profit taking and rising short interest.

    If these AI moves have your radar up, it could be a good moment to see what other high growth tech names are setting up for 2026 via high growth tech and AI stocks.

    With Alibaba trading at a steep discount to analyst targets despite double digit earnings growth and significant AI investment, is this a rare mispricing in a new AI cycle, or has the market already incorporated the potential upside?

    Most Popular Narrative: 24.2% Undervalued

    With Alibaba last closing at $150.06 versus a narrative fair value near $198, the current price implies investors are heavily discounting its long term AI and cloud earnings power.

    Advancing AI and cloud infrastructure, with Alibaba committing RMB 380 billion over three years, is positioning the company to benefit from persistent enterprise adoption of generative AI and increasing cloud workloads, and this should drive accelerated top line growth and expanding cloud revenue streams.

    Read the complete narrative.

    Want to see the math behind that kind of spending? The narrative quietly leans on steadily rising revenues, resilient margins, and a richer earnings multiple. Curious how those moving parts combine to justify a higher fair value than today’s price? Read on to unpack the full playbook behind this projection.

    Result: Fair Value of $198.04 (UNDERVALUED)

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

    However, elevated AI and quick commerce spending, along with intensifying competition, could compress margins and delay the earnings inflection that this optimistic narrative is banking on.

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

    Build Your Own Alibaba Group Holding Narrative

    If this outlook does not fully resonate with you, or you would rather stress test the numbers yourself, you can build a fresh narrative in under three minutes, Do it your way.

    A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Alibaba Group Holding.

    Looking for more investment ideas?

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    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.