Shares of Alibaba Group Holding Ltd. (NYSE:BABA) have already climbed 34.1% year-to-date, but the Alibaba stock forecast suggests there could still be plenty of room to run. Despite the rebound, Alibaba remains undervalued based on both earnings potential and growth across its core businesses. With increasing momentum in e-commerce and artificial intelligence (AI), the company looks set to deliver significant upside for investors.
Why Alibaba Still Looks Undervalued
The case for a bullish Alibaba stock forecast starts with its valuation. BABA trades at a forward price-to-earnings (P/E) ratio of just 12.2x—far below its Western counterpart Amazon.com Inc. (NASDAQ:AMZN), which trades at 34.5x. Its price-to-sales (P/S) ratio is only 2.09x versus Amazon’s 3.55x, despite Alibaba showing solid earnings and growth momentum.
Analysts expect Alibaba’s earnings per share (EPS) to grow by 19.5% in fiscal 2026. That kind of growth, paired with a relatively low valuation, indicates the stock is still undervalued. One bullish analyst has a price target of $180 for BABA, implying nearly 60% upside from current levels.
E-Commerce Remains a Cash Machine
Alibaba’s core e-commerce platforms, Taobao and Tmall, continue to thrive. In its latest earnings report, Alibaba posted a 12% year-over-year increase in customer management revenue. This growth came from better monetization, including stronger software service fees and broader adoption of marketing tools like Quanzhantui.
These platforms remain the foundation of Alibaba’s business, and enhancements aimed at improving user experience and merchant performance are paying off. Better product targeting, data analytics, and AI-driven recommendations are lifting conversion rates and order volumes.
Cloud and AI Power Alibaba’s Future
The Alibaba stock forecast becomes even more compelling when looking at its cloud computing division. Cloud revenue surged by 18% year over year, supported by growing demand for AI-powered public cloud services. Alibaba has positioned itself as a dominant force in China’s cloud market, and its AI tools are now being deployed across a wide range of sectors.
Revenue from AI products has grown at a triple-digit pace for seven straight quarters. Adoption is spreading across industries from tech to manufacturing, giving Alibaba a first-mover advantage in the region’s AI economy.
As AI becomes essential for business innovation and efficiency, Alibaba’s early investments in the space could prove transformative. That potential is central to any forward-looking Alibaba stock forecast.
International Expansion Gains Steam
Alibaba isn’t just winning at home. Its international commerce arm, AIDC, is growing quickly by tailoring products and models to local markets. It’s also leaning into cross-border commerce, particularly in Southeast Asia, where online shopping demand is booming.
By emphasizing local supply chains and efficient delivery, Alibaba is sidestepping some of the geopolitical and macroeconomic hurdles facing other global tech giants.
Cost Discipline and Divestitures Strengthen the Case
Alibaba’s recent results also showed gains in profitability. Each major business segment reported improved EBITA year over year, and group EBITA rose 36%. Some previously unprofitable divisions are approaching break-even, which could further improve margins going forward.
Additionally, the company plans to divest up to $2.6 billion in non-core assets. This move will free up cash for high-growth investments and could lead to shareholder-friendly actions like buybacks or dividends—adding more upside to the Alibaba stock forecast.
Wall Street Sees More Upside
Wall Street remains bullish. The consensus rating on Alibaba is “Strong Buy,” and the average price target is $159.55. The Street-high estimate of $180 underscores just how much confidence analysts have in the company’s long-term prospects.
Conclusion
Despite its recent rally, the Alibaba stock forecast suggests there’s still significant upside ahead. With solid fundamentals, accelerating AI and cloud growth, disciplined cost management, and favorable valuation metrics, Alibaba could be one of the most attractive large-cap opportunities in the market today. Long-term investors may want to keep a close eye on BABA as it aims for $180 and beyond.
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