Chinese e-commerce giant Alibaba (BABA) is set to announce its fiscal Q3 FY25 results on February 20. Alibaba stock has surged more than 74% over the past year, driven by optimism about its cloud computing division, AliCloud, the growth of its domestic e-commerce market, and its expanding presence in the AI sector. Wall Street analysts expect the company to report earnings of $2.67 per share, representing a 2.7% increase year-over-year.
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Meanwhile, revenues are expected to grow by 6% from the year-ago quarter to $38.20 billion, according to data from the TipRanks Forecast page. Notably, Alibaba missed EPS estimates only twice out of the last nine quarters.
Recent Event Ahead of Q3 Print
Just last week, Alibaba stock gained momentum after securing a deal with Apple (AAPL). As part of its AI agreement, Alibaba’s Qwen 2.5 model will be integrated into iPhones sold in China, enhancing key features such as voice recognition, content recommendations, and photo editing for Chinese users.
Analysts’ Views on BABA Ahead of Q3 Results
Ahead of Alibaba’s Q3 results, analysts remain optimistic about the company’s AI potential. One such analyst is Alex Yao of JPMorgan, who gave a Buy rating on the stock along with a $125 price target. He said that Alibaba remains his “favorite stock in the China internet space.”
Yao highlighted that Alibaba’s stock has surged 23% since January 29, following the launch of its latest large language model, Qwen 2.5, significantly outperforming the MSCI China Index. He believes that the stock could see further upside due to the growing cloud revenue with increasing AI adoption and improving China’s e-commerce profits.
Similarly, Jefferies analyst Thomas Chong is also bullish on Alibaba Cloud and growing AI demand. He notes that Alibaba’s Qwen model powers leading open-source AI models, and its latest Qwen 2.5-Max MoE model outperforms competitors in key benchmarks. Additionally, he sees Alibaba’s cloud infrastructure gaining momentum in the enterprise sector. Based on these factors, Chong raised his price target to $150 while keeping a Buy rating.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting an 8.94% move in either direction.
Is Alibaba Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on seven Buys and one Hold assigned in the past three months, as indicated by the graphic below. The average BABA stock price target is $129.13, implying an upside potential of 3.53%.
