Alibaba (BABA) AI Stock Analysis

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Alibaba

(NYSE:BABA)

Rating:81Outperform

Price Target:―

Alibaba's strong financial performance, positive earnings call outcomes, and reasonable valuation contribute to a solid overall stock score. The company's strategic investments in AI and cloud, along with robust e-commerce growth, bolster its market position despite challenges in free cash flow and specific segment losses.

Positive Factors

AI Demand

Alibaba will benefit from the robust China AI inference demand, being the AI enabler (cloud) and adopter (2C/2B applications).

Cloud Services

Cloud margins for Alibaba have exceeded expectations, partially offsetting other losses.

Earnings Growth

Alibaba delivered stronger-than-expected earnings growth for Taobao and Tmall (T&T) Group.

Negative Factors

Instant Commerce Investment

Investment in food delivery and instant commerce is likely to pressure near-term margins.

Local Services Loss

Wider-than-expected loss generated from Local Services Group (LSG) and Cainiao.

Revenue Forecasts

Revenue forecasts for Alibaba have been reduced by 1-2% due to decreased revenue estimates for Cainiao.

Alibaba (BABA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$290.60B

Dividend Yield0.78%

Average Volume (3M)23.38M

Price to Earnings (P/E)16.1

Beta (1Y)0.71

Revenue Growth4.28%

EPS Growth28.42%

CountryUS

Employees194,320

SectorConsumer Cyclical

Sector Strength74

IndustrySpecialty Retail

Share Statistics

EPS (TTM)1.74

Shares Outstanding2,385,776,600

10 Day Avg. Volume17,972,621

30 Day Avg. Volume23,375,972

Financial Highlights & Ratios

PEG Ratio0.45

Price to Book (P/B)2.30

Price to Sales (P/S)0.00

P/FCF Ratio17.23

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$164.50

Price Target Upside33.10% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering13

Alibaba Business Overview & Revenue Model

Company DescriptionAlibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao and Tmall, which are digital retail platforms; Alimama, a proprietary monetization platform; 1688.com and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, Trendyol, and Daraz that are e-commerce platforms; Freshippo, a retail platform for groceries and fresh goods; and Tmall Global, an import e-commerce platform. The company also operates Cainiao Network logistic services platform; Ele.me, an on-demand delivery and local services platform; Koubei, a restaurant and local services guide platform; and Fliggy, an online travel platform. In addition, it offers pay-for-performance, in-feed, and display marketing services; and Taobao Ad Network and Exchange, a real-time online bidding marketing exchange. Further, the company provides elastic computing, storage, network, security, database, big data, and IoT services; and hardware, software license, software installation, and application development and maintenance services. Additionally, it operates Youku, an online video platform; Quark, a platform for information search, storage, and consumption; Alibaba Pictures and other content platforms that provide online videos, films, live events, news feeds, literature, music, and others; Amap, a mobile digital map, navigation, and real-time traffic information app; DingTalk, a business efficiency mobile app; Tmall Genie smart speaker; and Qwen, an artificial intelligence chatbot. The company was incorporated in 1999 and is based in Hangzhou, the People's Republic of China.

How the Company Makes MoneyAlibaba generates revenue through multiple streams, primarily from its core commerce segment, which includes retail marketplaces like Taobao and Tmall, as well as international commerce platforms like AliExpress and Lazada. The company earns money through commission fees on transactions, advertising services, and membership fees for premium services. Additionally, Alibaba Cloud contributes to revenue through cloud computing services, offering infrastructure and data management solutions to businesses. Digital media and entertainment, including platforms like Youku and Alibaba Pictures, also contribute through subscription and advertising revenue. Furthermore, Alibaba benefits from strategic partnerships and investments, such as its stake in financial services company Ant Group, which provides additional financial and technological synergies.

Alibaba Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Breaks down revenue by business unit, revealing which areas are generating the most sales and indicating potential growth drivers or areas needing improvement.

Chart InsightsAlibaba's Cloud segment shows robust growth, bolstered by AI-related products achieving triple-digit growth for seven consecutive quarters. The Taobao and Tmall Group's revenue is recovering, driven by a 12% increase in customer management revenue. However, traditional commerce faces challenges, with a 12% decline in China due to logistics integration. International Commerce is gaining momentum, aligning with a 22% revenue increase. Despite strong revenue and EBITDA growth, free cash flow has declined sharply due to cloud infrastructure investments, highlighting a strategic focus on long-term technological advancement.

Data provided by:

Main Street Data

Alibaba Financial Statement Overview

Summary

Alibaba demonstrates strong financial health with notable revenue and profit growth, a solid balance sheet with low leverage, and strong cash generation. Despite a slight decline in free cash flow due to strategic investments, the company is well-positioned within the retail industry.

Income Statement

Very Positive

Alibaba exhibits a strong financial performance with robust revenue growth of 13.0% from 2023 to 2024 TTM. The gross profit margin stands at 38.4%, indicating efficient cost management. The net profit margin is impressive at 12.3%, reflecting strong profitability. Additionally, the EBIT margin of 13.0% and EBITDA margin of 16.3% highlight efficient operational performance.

Balance Sheet

Very Positive

Alibaba maintains a solid financial position with a low debt-to-equity ratio of 0.23, indicating prudent leverage management. The return on equity is strong at 12.1%, showcasing effective utilization of shareholders' equity. The equity ratio is healthy at 54.0%, demonstrating a strong asset base funded by equity.

Cash Flow

Positive

The company shows a strong cash flow position with a free cash flow growth rate of -10.3% due to strategic investments. The operating cash flow to net income ratio is 1.30, indicating robust cash generation from operations. The free cash flow to net income ratio of 1.11 suggests that operations are efficiently converting profits to cash.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
981.77B	941.17B	868.69B	853.06B	717.29B	509.71B
	Gross Profit
381.01B	354.85B	318.99B	313.61B	296.08B	227.34B
	EBIT
127.20B	113.35B	100.35B	105.30B	170.05B	172.40B
	EBITDA
169.39B	164.01B	153.95B	144.56B	157.50B	185.79B
	Net Income Common Stockholders
120.92B	80.01B	72.78B	62.25B	150.58B	149.43B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
453.28B	571.03B	524.47B	455.08B	483.44B	363.21B
	Total Assets
1.85T	1.76T	1.75T	1.70T	1.69T	1.31T
	Total Debt
231.53B	205.61B	161.35B	141.34B	149.15B	125.43B
	Net Debt
68.74B	-42.51B	-31.73B	-48.55B	-172.11B	-205.07B
	Total Liabilities
760.17B	652.23B	630.12B	613.36B	606.58B	433.33B
	Stockholders Equity
1.00T	986.54B	989.66B	948.48B	937.47B	755.40B
Cash Flow		Free Cash Flow
134.28B	149.66B	165.40B	89.44B	188.60B	135.22B
	Operating Cash Flow
157.53B	182.59B	199.75B	142.76B	231.79B	180.61B
	Investing Cash Flow
-129.30B	-21.82B	-135.51B	-198.59B	-244.19B	-108.07B
	Financing Cash Flow
-126.13B	-108.24B	-65.62B	-64.45B	30.08B	70.85B

Alibaba Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price123.59

Price Trends

50DMA

124.55

Negative

100DMA

115.64

Positive

200DMA

103.35

Positive

Market Momentum

MACD

1.31

Positive

RSI

49.85

Neutral

STOCH

26.90

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BABA, the sentiment is Neutral. The current price of 123.59 is below the 20-day moving average (MA) of 124.42, below the 50-day MA of 124.55, and above the 200-day MA of 103.35, indicating a neutral trend. The MACD of 1.31 indicates Positive momentum. The RSI at 49.85 is Neutral, neither overbought nor oversold. The STOCH value of 26.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for BABA.

Alibaba Risk Analysis

Alibaba disclosed 70 risk factors in its most recent earnings report. Alibaba reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

Changes to our shareholder return initiatives may adversely affect the trading prices of our ADSs and Shares. Q1, 2024

Alibaba Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BABA	81 Outperform	$290.60B	16.10	13.04%	0.78%	4.28%	28.42%
PDD	78 Outperform	$164.90B	11.12	45.06%	―	57.51%	82.28%
SE	77 Outperform	$96.33B	114.21	11.13%	―	30.18%	1995.22%
JD	77 Outperform	$52.39B	8.22	19.81%	2.91%	8.13%	91.39%
CPNG	74 Outperform	$49.31B	196.10	6.06%	―	20.88%	-80.08%
AMZN	73 Outperform	$2.19T	33.28	25.24%	―	10.08%	71.88%
Sector *	62 Neutral	$6.97B	11.36	2.77%	3.91%	2.66%	-22.00%

* Consumer Cyclical Sector Average

Performance Comparison

BABA

Alibaba

123.59

42.65

52.69%

AMZN

Amazon

201.12

17.99

9.82%

33.65

0.97

2.97%

Sea

163.26

89.59

121.61%

PDD

PDD Holdings

116.20

-30.89

-21.00%

CPNG

Coupang, Inc. Class A

27.38

4.97

22.18%

Alibaba Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q4-2025)

% Change Since: -7.80%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong narrative on revenue and EBITDA growth, driven by successful performances in AI, cloud, and e-commerce sectors, as well as significant returns to shareholders. However, challenges were noted in traditional commerce and cash flow, and increased losses in local services due to seasonal factors.

Q4-2025 Updates

Positive Updates

Revenue and EBITDA Growth

Total revenue excluding Sun Art at Intime grew 10% year-over-year. Adjusted EBITDA increased 36% year-over-year.

AI and Cloud Performance

Alibaba Cloud's revenue growth accelerated to 18% this quarter. AI-related products maintained triple-digit year-over-year growth for the seventh consecutive quarter.

E-commerce Success

Taobao and Tmall Group saw customer management revenue rise 12% year-over-year. 88VIP members surpassed 50 million.

International E-commerce Growth

AIDC achieved year-over-year revenue growth of 22%. The company remains on track to achieve overall quarterly profitability in the coming fiscal year.

Shareholder Returns

A cash dividend of $2 per ADS, totaling $4.6 billion, was declared. Combined with $11.9 billion in share repurchases, total returns to shareholders were $16.5 billion.

Negative Updates

Challenges in Traditional Commerce

Revenue from China decreased by 12% due to the integration of logistic offerings into e-commerce businesses.

Decreased Free Cash Flow

Free cash flow decreased 76% to RMB3.7 billion, mainly due to increased cloud infrastructure expenditure.

Local Service Group Challenges

Adjusted EBITDA loss increased quarter-over-quarter due to seasonal effects and high investments during the Chinese New Year holiday.

Company Guidance

During the Alibaba Group's March Quarter 2025 and Full Fiscal Year 2025 Results Conference Call, the company provided guidance on several key metrics. Total revenue, excluding Sun Art and Intime, increased by 10% year-over-year, while adjusted EBITDA rose by 36% year-over-year. Alibaba Cloud's revenue grew by 18% this quarter, with AI-related product revenue maintaining triple-digit year-over-year growth for the seventh consecutive quarter. The Taobao and Tmall Group reported a 12% year-over-year increase in customer management revenue, contributing to an 8% rise in adjusted EBITDA. The group's consolidated revenue reached RMB236.5 billion, marking a 7% increase year-over-year, and consolidated adjusted EBITDA climbed 36% to RMB32.6 billion. Non-GAAP net income increased by 22% to RMB29.8 billion, while GAAP net income rose to RMB12 billion. Operating cash flow was RMB27.5 billion, a growth of 18%, although free cash flow decreased by 76% to RMB3.7 billion. The company reported a strong net cash position of RMB366.4 billion as of March 31, 2025. Additionally, the company announced a total cash dividend distribution of $2 per ADS, amounting to $4.6 billion for the fiscal year, alongside $11.9 billion in share repurchases, leading to a total return of $16.5 billion to shareholders.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.