Chinese e-commerce giant Alibaba (BABA) is set to report its Q1 FY26 earnings next month. So far this year, the stock has climbed over 39%, driven by strong gains in its AI-powered cloud services and growing demand for instant delivery. Adding to this momentum, Nvidia (NVDA) recently confirmed plans to resume sales of its H20 AI chips in China. As a key player in the region’s tech space, Alibaba stands to benefit from improved chip supply and stronger AI infrastructure.
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Recently, Jefferies named Alibaba as one of the top stocks to watch in China’s growing AI sector. In its latest update, the firm raised its forecast for Alibaba Cloud’s revenue growth in the June quarter to 23%, up from its previous estimate of 20%. Given BABA’s strong growth story, Wall Street analysts remain optimistic about the stock. Despite these positives, rising costs remain a major concern for Alibaba ahead of the Q1 print.
What to Expect from BABA’s Q1 Earnings
Wall Street analysts expect Alibaba to report earnings of $2.22 per share for Q1, down 3% from the year-ago quarter. The decline could be due to the company’s heavy investment in logistics and delivery.
Meanwhile, analysts project Q1 revenues at $35.46 billion, according to the TipRanks Analyst Forecasts Page. The figure marks a year-over-year increase of about 6%.
Analysts Warn on Margin Pressure
Over the past week, several analysts have trimmed their price targets on Alibaba as they expect rising costs to weigh on the company’s profits in the first quarter.
One such analyst is Thomas Chong of Jefferies, who recently lowered his price target to $150, pointing to a 15% EBITA decline in the June quarter, mainly due to heavy investment in logistics and delivery. Still, he sees 23% growth in cloud revenue and strong order activity, including a record 80 million daily orders across Taobao Instant Commerce and Eleme.
Similarly, Morgan Stanley analyst Gary Yu lowered his price target from $180 to $150 per share. The analyst expects operating profit to decline by 16% in the June quarter, with a steeper 20% drop in the company’s core e-commerce and local services segments.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain highly bullish about Alibaba’s stock trajectory. With 14 Buy ratings and one Hold rating, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $153.15 implies about 32% upside potential from current levels.
