Wall Street Is Betting on Alibaba Stock. Should You?

After navigating a turbulent few years marked by regulatory crackdowns, economic uncertainty, and internal restructuring, Alibaba Group (BABA) is staging a compelling comeback. The Chinese tech giant has seen its stock rise 52.1% over the past year, a rally driven by the solid performance in its flagship e-commerce business and its rapidly expanding artificial intelligence (AI)-powered cloud computing division.

Besides focusing on accelerating its revenue growth, Alibaba is taking steps to streamline its operations and doubling down on areas with significant growth prospects, such as e-commerce, cloud computing, and AI infrastructure. By divesting non-core assets, the company is driving efficiency and long-term profitability. This strategic shift is positioning Alibaba to better weather macroeconomic headwinds and capitalize on high-growth opportunities in both the domestic and global markets.

Most of the analysts covering BABA stock are bullish about Alibaba’s outlook. Its healthy financials, strong position in high-potential segments, and renewed focus on operational excellence lay the groundwork that could fuel sustained growth down the road.

Alibaba’s cloud computing division has emerged as a significant growth driver thanks to skyrocketing demand for AI-powered services. In the quarter ended March, Alibaba Cloud posted an 18% year-over-year increase in revenue, primarily driven by public cloud and AI-related offerings. Impressively, AI product revenue has now grown by triple digits for seven straight quarters.

For the full fiscal year, Alibaba Cloud saw double-digit growth, and management remains confident that AI will continue to be a primary growth engine for years to come.

The surge in BABA’s cloud revenues is tied to growing adoption of AI technologies across industries. Alibaba is investing heavily in AI infrastructure, aiming to solidify its position in this fast-growing segment. These investments are already bearing fruit. AI applications are now expanding beyond back-end enterprise systems into customer-facing tools. Moreover, adoption isn’t limited to large corporations. Notably, small and mid-sized businesses are increasingly integrating AI into their operations, creating a widening customer base for Alibaba’s solutions.

Notably, traditional sectors such as manufacturing and agriculture are exploring AI-driven efficiencies with Alibaba’s tools, signaling a massive opportunity for long-term penetration. This industry-wide AI adoption reflects the breadth of Alibaba Cloud’s growth potential, especially as more businesses look to modernize and optimize with tech-driven solutions.

While cloud and AI steal headlines, Alibaba hasn’t taken its foot off the gas in its e-commerce business. Taobao and Tmall, the backbone of Alibaba’s digital commerce empire, continue to deliver robust user growth. The number of premium loyalty members (88VIP) has now surpassed 50 million, an indication of increasing consumer engagement.

In the latest quarter, revenue from customer management services, an important metric for gauging merchant activity, rose 12% year-over-year, while adjusted EBITA increased 8%. Alibaba is also enhancing the merchant experience, increasing support for sellers with high-quality products and services, which helps boost user satisfaction and long-term loyalty.

On the international front, Alibaba’s cross-border commerce arm, Alibaba International Digital Commerce (AIDC), saw revenues jump 22% compared to the previous year. With a diversified global footprint and growing operational efficiency, AIDC appears well-prepared to navigate potential challenges from shifting trade regulations. The company remains on track to hit overall profitability in its international e-commerce operations in the current fiscal year.

Alibaba will continue to focus on its core businesses of e-commerce, AI, and cloud. Analysts see this focused strategy as a catalyst for sustained growth, especially as global demand for AI and cloud services continues to surge.

Wall Street analysts have collectively rated Alibaba a “Strong Buy,” signaling confidence in the company’s trajectory. Their average price target for the stock stands at $157.91, roughly 33% higher than its current trading level.

With strong momentum in both its core e-commerce operations and its fast-growing, AI-driven cloud computing division, Alibaba is laying a solid foundation for sustainable growth. The company’s focus on operational efficiency, divestment of non-core assets, and targeted investments in future technologies positions it to scale its business profitably.

Wall Street’s bullish sentiment, its exposure to high-growth sectors, and consistently solid financial performances suggest that Alibaba stock is a buy.

On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com