Wall Street analysts remain bullish on Alibaba (BABA) stock, maintaining a Strong Buy rating as the company strengthens its position in AI (artificial intelligence). With advancements like DeepSeek and potential infrastructure support for emerging AI platforms, Alibaba is well-positioned for long-term growth.
Last week, Alibaba made headlines by unveiling its new open-source AI model, QwQ-32B, through its AI unit Qwen, directly challenging DeepSeek’s R1 model. Qwen claimed that QwQ-32B delivers similar output while utilizing just 5% of the parameters compared to DeepSeek’s model, highlighting its efficiency and innovation in AI development.
Alibaba’s Cloud Computing Strength Fuels Bullish Outlook
While AliExpress, Alibaba’s online marketplace, remains popular in the U.S. for its bulk pricing, Alibaba’s true strength lies beyond retail—its growing cloud computing footprint. Last month, Alibaba unveiled a $53 billion investment plan over the next three years to strengthen its AI and cloud computing infrastructure. This commitment exceeds its total spending in the sector over the past decade.
On top of that, Alibaba’s integration of AI into its cloud business continues to drive strong revenue growth. For six consecutive quarters, AI-related product revenue has recorded triple-digit year-over-year growth. As industries increasingly adopt AI solutions, demand for Alibaba Cloud services remains strong, with expectations for continued momentum.
Meanwhile, its expanding data centers further enhance its ability to leverage consumer insights, much like Amazon (AMZN).
Daiwa Reaffirms Buy Rating on BABA Stock
Last week, analyst John Choi at Daiwa reiterated his Buy rating on BABA stock, driven by its cloud business prospects. Meanwhile, Choi raised the price target for Alibaba’s Hong Kong-listed shares (HK:9988) from HK$165 to HK$175.
Choi noted that after DeepSeek’s AI breakthroughs during the Spring Festival, demand for AI inference has soared, causing a cloud supply shortage. Choi also stated that the company’s higher capital expenditure compared to peers is expected to strengthen its position in the cloud market, supporting future growth and a potential re-rating of its cloud business. Consequently, Daiwa raised its FY26 cloud revenue growth forecast to 20% and increased its capital expenditure estimates to ¥126 billion for FY26 and ¥139 billion for FY27.
In addition, Daiwa increased its FY25-FY27 earnings per share (EPS) forecasts for BABA by 1-3%, citing cloud revenue growth and expanded cross-selling opportunities.
Insights from TipRanks’ Bulls Say, Bears Say
TipRanks’ “Bulls Say, Bears Say” tool provides insights into analysts’ perspectives on Alibaba’s stock.
Apart from AI adoption and cloud growth, optimistic analysts highlight the active share buyback program. Alibaba’s share repurchase program remains active, with $20.7 billion authorized for buybacks through March 2027. This ongoing initiative could strengthen its stock position and enhance shareholder value.
Is Alibaba Stock a Good Buy Now?
On TipRanks, BABA stock has a Strong Buy consensus rating based on 16 Buys assigned in the last three months. At $165.61, the Alibaba share price target implies a growth rate of 17.7% on the current trading price.
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