For years, Alibaba (BABA) seemed stuck in place—delivering solid fundamentals but showing little traction on the chart. Then, suddenly, momentum shifted: BABA broke through resistance and is now trading near $185, a level last seen in late summer 2021—a technical threshold many investors had long written off.
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So, what’s different this time? Two growth engines have kicked in simultaneously: a full-scale drive into AI and cloud, and a clear rebound in its core e-commerce business. Even better, the stock still looks reasonably valued given this mix. That’s why I remain Bullish on BABA.
AI & Cloud, Foot on the Floor
Underpinning Alibaba’s performance is its cloud narrative. In its latest report (Q1 FY2026), Alibaba’s Cloud Intelligence revenue jumped 26% year over year, with AI-related products posting triple-digit growth for the eighth straight quarter. Management pointed to stronger public-cloud demand and noted that AI now accounts for a “significant portion” of external customer revenue—evidence of real monetization, not just glossy presentations.
Momentum continued to build at Apsara 2025, a couple of weeks later. Alibaba introduced Qwen3-Max, its largest model to date, with more than 1 trillion parameters, alongside Qwen3-Omni for multimodal and immersive applications. CEO Eddie Wu stressed that industry AI demand has “far exceeded” expectations and hinted at spending beyond the already massive 380 billion yuan (~$53 billion) three-year AI infrastructure plan.
The company also announced a partnership with Nvidia (NVDA) on “physical AI” and outlined plans for new data centers in Brazil, France, and the Netherlands, with additional locations planned in Mexico, Japan, South Korea, Malaysia, and Dubai. For outside validation, research firm Omdia highlighted Alibaba Cloud’s broad GenAI stack across Model Studio and PAI—a signal that investors may finally be viewing this platform as more than just a China story.
Chinese Commerce Finds Its Second Wind
Meanwhile, the core engine is humming. Last quarter, customer-management revenue—the lifeblood of Taobao/Tmall’s ad-and-services model—rose 10% YoY on better take-rates. In contrast, the Taobao app saw a 25% jump in monthly active users during the first three weeks of August.
88VIP, Alibaba’s top-spending membership tier, expanded at a double-digit pace to 53 million members, and the 6.18 mid-year festival delivered, with 453 brands surpassing RMB 100 million in GMV.
Post-quarter trends also look encouraging. Alibaba is leaning into quick commerce: Taobao Instant Commerce and Ele.me have launched in-store group-buying in Shanghai, Shenzhen, and Jiaxing—an open challenge to Meituan’s dominance in local services. At the same time, Amap (AutoNavi) hit a record 360 million daily active users on the first day of Golden Week, fueled by AI-driven “Street Stars” content and aggressive subsidies. That traffic, in turn, can flow back into the broader commerce ecosystem.
The price war in instant retail is very real—but Alibaba’s user flywheel is spinning again.
Valuation: Sensible, Not Stretched
The natural question after BABA’s face-melting rally is whether the stock has overheated. On forward earnings, the answer looks like “not really.” Shares trade at ~25x forward earnings—above JD.com’s (JD) ~18x but just under Tencent’s (TCEHY) ~27x.
JD looks cheaper, but its low-margin, logistics-heavy mix and exposure to the instant-commerce price war weigh on quality. Tencent, with its stable gaming and social cash flows, warrants a premium multiple. For Alibaba, ~25x feels justified given that (1) China commerce is healing, (2) cloud is reaccelerating with 26% growth and eight straight quarters of triple-digit AI product revenue, and (3) management is plowing billions into compute, models, and global data centers to extend the runway.
If AI and cloud reach scale economics, today’s mid-20s multiple on consolidated earnings could ultimately prove conservative. There’s also balance-sheet strength to consider. Alibaba holds $22.7 billion in net cash, which pulls the effective multiple lower. Add in aggressive shareholder returns, and the odds of this rally having further legs look better than many assume.
Is Alibaba Stock a Buy, Sell, or Hold?
Wall Street remains quite bullish on BABA, despite shares having yet to experience an extended rally. The stock carries a Strong Buy consensus rating based on 18 Buy and two Hold recommendations over the past three months. Notably, not a single analyst rates the stock a Sell. BABA’s average stock price target of $191.99 suggests just over 1% upside from current levels.
BABA Back at 2021 Highs — and This Time the Engines Are Real
Alibaba has just stitched together a robust commerce core and a newly muscular AI and cloud arm, both of which are showing up in the numbers. The stock’s pushed back to 2021 altitude for a reason. Could the instant-retail knife fight nick margins? Absolutely. However, with cloud computing accelerating, models rolling out, and user funnels expanding, I believe that BABA’s current valuation looks more “fair for growth” than “priced for perfection.” If the execution continues to compound, this breakout has the legs to run.