Alibaba Stock Selloff Masks Surging Cloud and AI Growth

Alibaba ( (BABA) ) has fallen by -10.46%. Read on to learn why.

Alibaba shares fell 10.46% over the past week as investors reacted to a sharp drop in quarterly profit and ongoing weakness in the core e‑commerce business. The latest fiscal Q3 results showed adjusted net income plunging 67% year‑on‑year, hit by heavy reinvestment in e‑commerce and artificial intelligence initiatives. Short‑term margin pressure, softer consumer demand in China, and a recent multi‑month slide in the stock have all combined to push the price lower, despite the company’s efforts to reposition itself for future growth.

Yet the selloff comes even as Alibaba’s cloud and AI businesses show strong momentum, a key factor behind Wall Street’s continued optimism. Cloud revenue rose about 36–35% year‑on‑year, with AI‑related sales growing at triple‑digit rates for ten consecutive quarters and management targeting more than $100 billion in external AI and cloud revenue within five years. Analysts highlight this shift toward a usage‑driven, MaaS (Model‑as‑a‑Service) model and the easing of pricing pressure in China’s cloud market as reasons to expect a recovery in margins and a structural re‑rating of the stock over the medium term.

Despite the recent 10.46% weekly slide, major brokers including Jefferies, Morgan Stanley, BofA Securities, Goldman Sachs, and US Tiger Securities largely see Alibaba as a long‑term winner and maintain Buy ratings. They argue that the profit hit is driven by intentional reinvestment rather than collapsing demand, and they forecast robust growth in both cloud and core commerce as consumption trends improve and quick‑commerce losses narrow. Consensus price targets around the mid‑$190s to low‑$200s imply significant upside from current levels, suggesting that for investors willing to look beyond near‑term volatility, Alibaba’s current weakness could present an opportunity rather than a lasting setback.