Chinese e-commerce giant Alibaba Group Holding (BABA) has announced a 50 billion yuan ($7 billion) subsidy plan to support food delivery and online retail services over the next year. The move, announced by its e-commerce arm, Taobao, aims to benefit both shoppers and sellers.
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This push comes as Alibaba is facing growing pressure from local rivals like PDD Holdings (PDD), Meituan, and JD.com (JD)—all ramping up fast delivery and low-cost shopping. The subsidy effort is designed to protect market share and drive user growth in a crowded space.
While the high spending may raise short-term margin concerns, many analysts see it as a strategic play with potential for long-term payoff. Given BABA’s solid rebound this year and its aggressive push into fast delivery, analysts still see room for the stock to climb.
Alibaba’s Big Play for Local Delivery Dominance
The company is doubling down on instant commerce, a fast-growing space focused on same-day delivery. Taobao Instant Commerce and Eleme, its food delivery platform, are at the heart of this effort. These services handled over 60 million orders daily in late June, nearly double from a year ago.
The subsidy push is clearly aimed at scaling these platforms further, especially in smaller cities. By helping merchants cut prices and reach more users, Alibaba hopes to deepen customer loyalty and fend off rivals.
Alibaba Looks to the Future
At the same time, Alibaba is thinking beyond the near term. As part of its longer-term strategy, Chief Executive Eddie Wu has said the company plans to focus more on artificial intelligence. To support this shift, Alibaba Cloud will invest ¥380 billion (about $53 billion) over the next three years in cloud and AI growth. This shift comes after the fast rise of AI players like DeepSeek earlier this year.
Wu believes smart technology will help sellers run their businesses better and give shoppers a smoother experience. While the subsidies are meant to fight off rivals today, the real goal is to build long-term value.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain highly bullish about Alibaba’s stock trajectory. With 12 unanimous Buy ratings, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $166 implies about 47% upside potential from current levels.
