Alibaba stock has recovered this year as confidence in China tech improves and its main shopping business stabilizes. The stock is up 82% over the past year and 89% year-to-date. In a new report, Top Bank of America analyst Joyce Ju reaffirmed her Buy rating but cut the price target to $188 from $200, citing softer near-term growth in eCommerce.
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The change comes after Alibaba reported its Q2 FY26 earnings. Revenue reached 247.8 billion yuan ($34.8 billion), up 5% year-over-year, and ahead of expectations. However, adjusted diluted EPS was 4.36 yuan, below the 6.34 yuan consensus. Also, cash flow declined as Alibaba increased spending on AI, cloud, and quick commerce.
Even with these pressures, Ju remains positive on the stock. She highlighted strong momentum in Alibaba’s cloud business and improving trends in quick commerce losses, which she believes could support better earnings over time.
Cloud Growth Remains the Key Strength
Ju said Alibaba’s cloud business was the clear highlight this quarter. Cloud revenue rose 34% year-over-year to 39.8 billion yuan ($5.6 billion), beating estimates of about 38 billion yuan.
She added that AI demand is growing fast. AI-related revenue has seen triple-digit growth for nine straight quarters and now accounts for over 20% of cloud revenue. This strength is driven by both enterprise customers using Alibaba’s AI tools and the company’s own AI workloads.
The analyst expects cloud revenue to remain on a “fast growth track,” as Alibaba continues to invest in AI and enhance its product offerings.
Quick Commerce Losses Are Improving
On the quick commerce side, which includes Alibaba’s fast grocery and delivery business, Ju said trends are moving in the right direction. The division reported a 36–37 billion yuan loss, but this was better than expected, and the loss per order has narrowed to about 5 yuan.
Management also said losses should drop by at least half, with improvement already visible in October. Ju now expects losses to drop to about 20 billion yuan next quarter, which would help margins instead of pressuring them.
eCommerce Shows Near-Term Weakness
However, the analyst flagged softer expectations for Alibaba’s main eCommerce business in the December quarter. She expects customer management revenue (CMR), which includes merchant ads and fees, to slow as earlier pricing benefits fade.
As a result, she reduced her earnings forecasts by 7% to 20% through FY28. Even so, she does not see this as a long-term issue and noted that user traffic and engagement on Alibaba platforms continue to improve.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain bullish about Alibaba’s stock trajectory. With 19 Buy ratings and two Hold ratings, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $197.43 implies about 25.27% upside potential from current levels.
