Shares of Alibaba (BABA) sank over 2% on Wednesday after the e-commerce giant announced that it plans to raise $3.2 billion through convertible notes that will mature in 2032. Despite this drop, BABA stock is still up nearly 73% in 2025. The notes will be sold to non-U.S. investors in offshore deals and will be treated as senior unsecured debt of the company.
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These notes carry no interest but give buyers the option to convert them into Alibaba shares. This lets Alibaba raise money without paying yearly interest, while giving investors a chance to gain if the stock rises.
BABA Prioritizes Cloud and E-Commerce Expansion
Alibaba said it will use about 80% of the funds to boost its cloud infrastructure division. This includes expanding data center capacity, upgrading technology, and improving services to meet rising demand.
The company has been pushing its cloud arm as a key growth driver beyond e-commerce. But competition from Tencent (TCEHY), Huawei, and global leaders like Amazon (AMZN) Web Services has been growing. With new capital, Alibaba plans to expand its reach and build its position in AI and enterprise software.
Meanwhile, the other 20% of funds will go to Alibaba’s global e-commerce plans. The funds will improve cross-border platforms and drive growth in markets where online shopping is still rising.
It’s important to highlight that the company recently reported its Q1 FY26 earnings results, showing solid progress in AI, cloud, and e-commerce. Alibaba’s cloud revenue rose 26% year-over-year to 33.4 billion yuan, driven by growing enterprise demand for AI services. Meanwhile, its China e-commerce unit, which includes Taobao and Tmall, posted a 10% year-over-year revenue increase.
What Is the Price Target for BABA Stock?
Overall, Wall Street has a Moderate Buy consensus rating on Alibaba stock, based on 16 Buy ratings and one Hold rating assigned in the last three months. The average Alibaba price target of $165.43 implies about 14.94% upside potential from current levels.
