Shares of Alibaba Group Holding Ltd. (NYSE:BABA) have been on a remarkable rally, climbing nearly 70% in the past month. As the Chinese tech giant recovers from regulatory challenges and a sluggish economy, investors are wondering: does Alibaba stock have more upside?
Alibaba Stock Gains Momentum
Alibaba stock has outperformed most of its tech peers, gaining nearly 90% over the past year. The surge is fueled by strong growth in e-commerce, artificial intelligence (AI), and cloud services. Investors are increasingly bullish on Alibaba’s ability to navigate China’s evolving regulatory landscape and expand its global presence.
The company’s recent restructuring, which included spinning off certain business units and refocusing on core operations, has also contributed to renewed investor confidence.
E-Commerce and AI Drive Growth
Alibaba’s core businesses are thriving, with its flagship e-commerce platforms, Taobao and Tmall, reporting a 5% revenue increase in the latest quarter. Customer management revenue (CMR) jumped 9%, driven by higher gross merchandise volume (GMV) and improved monetization strategies.
The 88VIP membership program, which targets high-spending customers, has grown to 49 million members. These premium users contribute significantly to Alibaba’s profitability, strengthening the company’s long-term revenue potential.
AI is another key driver of Alibaba’s growth. The company’s AI-powered digital marketing tool, Quanzhantui, is enhancing ad performance and boosting merchant sales. Alibaba’s investments in AI-driven personalization and predictive analytics are expected to drive further engagement across its e-commerce ecosystem.
Alibaba Cloud Sees Strong Demand
Alibaba Cloud, the company’s cloud computing arm, posted a 13% year-over-year revenue increase in the latest quarter. Excluding consolidated subsidiaries, revenue growth stood at 11%, reflecting strong demand for AI-driven cloud solutions.
AI-related cloud revenue has seen triple-digit growth for six consecutive quarters. As more businesses adopt AI technologies, Alibaba Cloud is well-positioned to capture a significant market share.
The company is also expanding its international cloud footprint, targeting new markets and enterprise clients. This diversification reduces reliance on domestic operations and provides Alibaba with multiple revenue streams.
Alibaba’s Global Expansion Supports Long-Term Growth
Alibaba’s international commerce business is booming. Revenue from Alibaba International Digital Commerce (AIDC) surged 32%, with retail sales up 36% and wholesale operations growing 18%. Platforms like AliExpress and Trendyol are benefiting from strong cross-border demand.
Additionally, Alibaba’s logistics network, Cainiao, continues to scale, improving delivery efficiency and reducing operational costs. This global expansion enhances Alibaba’s resilience against domestic market fluctuations.
Is Alibaba Stock Still Undervalued?
Despite its strong rally, Alibaba stock remains attractively valued. The stock trades at a forward price-to-earnings (P/E) ratio of 16x and a price-to-sales (P/S) ratio of 2.3x—lower than many U.S. tech giants.
Wall Street analysts remain bullish, with a consensus “Strong Buy” rating. Many expect continued earnings growth as Alibaba benefits from improved regulatory clarity, AI expansion, and cloud dominance.
The Bottom Line on Alibaba Stock
Alibaba stock has staged an impressive comeback, fueled by strong fundamentals in e-commerce, AI, and cloud computing. While the recent rally has been substantial, the company’s long-term growth prospects remain compelling.
As Alibaba refines its business strategy, enhances profitability, and expands globally, investors may still see further upside in Alibaba stock.
Future Outlook for Alibaba Stock
Looking ahead, Alibaba’s continued investments in AI, cloud computing, and international expansion suggest that the stock could have even more room to grow. The company’s strong quarterly performance and commitment to optimizing its e-commerce and cloud businesses make it a top contender for long-term investors seeking exposure to the burgeoning AI sector.
While challenges remain in the form of regulatory scrutiny and market competition, Alibaba’s robust revenue growth, especially from AI and cloud services, positions it well to outperform expectations. As the company scales its operations and captures new market share, Alibaba stock could continue its upward trajectory.
Featured Image: Megapixl
