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    Alibaba Group Holding (NYSE:BABA): Rethinking Valuation After AI Glasses Launch and Ecosystem Integration Push

    Simply Wall St·12/08/2025 23:31:04
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    Alibaba Group Holding (NYSE:BABA) just gave investors a fresh AI talking point, rolling out its Quark AI Glasses while tightening its ecosystem by folding more services into Taobao to deepen user engagement.

    See our latest analysis for Alibaba Group Holding.

    These AI and ecosystem moves are landing in a market that has already rerated Alibaba in a big way. The share price is at $158.13 after a powerful year-to-date rally, and a 1-year total shareholder return of 74.15% is signaling momentum that still looks more constructive than cautious, despite some earnings volatility and headline risk.

    If this kind of AI-driven story has your attention, it might be a good time to see what else is shaping up in high growth tech and AI stocks beyond the usual mega caps.

    After a blistering rerating and mounting AI optimism, Alibaba still trades at a steep discount to analyst targets and many intrinsic value estimates. This raises the key question: is this genuine mispricing, or is the market already discounting years of growth?

    Most Popular Narrative: 20.1% Undervalued

    With the most followed narrative putting fair value around $198 versus a $158.13 close, the gap points to meaningfully higher earnings quality ahead.

    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 how these AI and cloud bets translate into future earnings power, revenue momentum, and a richer profit multiple over time? The narrative spells out the growth runway, the margin reset, and the valuation bridge that underpins this higher fair value, but keeps one central assumption hidden in plain sight.

    Result: Fair Value of $198 (UNDERVALUED)

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

    However, heavy AI and quick commerce investment, along with intense local competition, could compress margins and delay the earnings inflection that this upbeat narrative anticipates.

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

    Build Your Own Alibaba Group Holding Narrative

    If you interpret the numbers differently or want to stress test the assumptions yourself, you can build a custom narrative in minutes, Do it your way.

    A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Alibaba Group Holding.

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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.