Alibaba Stock Price Forecast - BABA at $149 AI Hyperscaler With 34% Cloud Growth And Re-Rating Upside

Alibaba NYSE:BABA – AI Hyperscaler At A Discount, Not Just A China Retail Play

Business Mix And Current Valuation For NYSE:BABA

Alibaba Group Holding Ltd (NYSE:BABA), trading around $149.79 with a forward P/E close to 20x and a market cap near $357.4B, is still reported as getting roughly 68% of its revenue from domestic and international e-commerce but the growth engine has clearly shifted to cloud and AI. The market continues to price the stock like a cyclic China consumer proxy while the numbers already look like an integrated AI and cloud infrastructure story. At about 20x next year’s earnings, you are paying a “China risk” multiple for a company that is simultaneously defending its leading marketplace and building scale in a capital-intensive, high-margin cloud and AI stack that is growing more than twice as fast as the legacy commerce base.

Cloud Intelligence Group Growth And Market Position

The Cloud Intelligence Group (CIG) is the core of the rerating thesis. In the September 2025 quarter, CIG generated RMB 39.8B in revenue, up 34% year over year, compared with 16% growth in the main e-commerce segment. Over the last six months, CIG has posted roughly 30% revenue growth and 31% profit growth on an EBITA basis, proving that this is already a profitable hyperscaler, not an early-stage cash burner. In Mainland China cloud infrastructure, Omdia data show Alibaba with around 34% share, roughly double Huawei at 17% and comfortably ahead of Tencent Cloud at about 10%. That is clear category leadership in the one part of the business where global capital is still prepared to pay up for growth. CIG is not just selling raw compute; it is bundling full-stack AI infrastructure, models and platform services, which makes the revenue mix structurally better than pure commodity hosting.

T-Head AI Chips And Qwen Models As Strategic Levers

Alibaba’s T-Head processors and Qwen model family are the strategic backbone of its AI positioning. T-Head is building cost-efficient custom silicon for IoT, edge AI and data centers, directly aligned with Beijing’s “Made in China 2025” push to reduce dependence on foreign chip suppliers. That policy tailwind matters: Chinese enterprises will be nudged over time to replace imported GPUs with domestic alternatives, and Alibaba is lining itself up as a default local supplier inside its own cloud. On the model side, Qwen3-Max already ranks in the top tier of reasoning models on key public benchmarks, sitting around the top-20 globally, which is good enough to power most Chinese enterprise workloads. More important than absolute benchmark rank is unit economics: Qwen API output pricing is less than half the cost of flagship Western models such as GPT-5.x equivalents, which allows Chinese corporates to automate customer support, documentation and internal workflows at a materially lower cost per token. The Qwen app crossed more than 10M downloads in its first week of public beta and is being positioned as an AI entry point that will integrate e-commerce, maps, local services and everyday tools. That makes the AI stack self-reinforcing: the more consumers and merchants use Qwen, the more data and use-cases feed back into CIG.

Quick Commerce Spending, EPS Volatility And Why The Market Is Punishing NYSE:BABA

The drag on sentiment is not cloud; it is quick commerce. In Q2 FY26, group-level adjusted EBITDA fell about 78% year over year and GAAP net income dropped 53% to roughly RMB 20.6B, driven largely by heavy reinvestment in instant delivery and retail. Quick commerce revenue grew around 60% YoY and helped push broader e-commerce to 10% growth, while per-order losses were cut roughly in half versus the previous quarter, but the profitability hit is obvious. Management explicitly guided that adjusted EBITA will remain “choppy” because of intense competition and continued user-experience investment. For a market that is currently rewarding clean AI margin expansion stories, that guidance is enough to justify a discount. The reduction in buybacks underlines the capital allocation shift: repurchases collapsed to about $300M in the last quarter, a 93% YoY decline, as cash is redirected into CIG infrastructure and quick commerce. If you want linear EPS progression and aggressive capital returns, NYSE:BABA is the wrong name. If you are prepared to accept a noisy P&L while cloud and AI scale, the volatility is an entry point rather than a thesis breaker.

AI Capacity Cycle, CapEx Guidance And Supply–Demand Dynamics

On AI infrastructure, Alibaba is effectively telling you capacity will remain tight for years. Management has laid out a three-year CapEx plan of roughly RMB 380B focused on AI and cloud build-out and has been explicit that this figure could be raised if customer demand continues to exceed what current deployment can serve. Internally and across the industry, current-generation GPUs and even 3–5-year-old hardware are running at high utilization, with very little idle capacity in hyperscale environments. That picture fits with commentary that AI resources will remain undersupplied for at least the next three years, even as more advanced chips like Nvidia’s H200 become available to Chinese players under tighter export rules. In that environment, NYSE:BABA is not dealing with a “bubble” in AI infrastructure; it is operating in a constrained supply cycle where well-positioned capacity commands premium prices and high utilization.

Relative Valuation Versus U.S. Hyperscalers And Chinese Tech Peers

On valuation, NYSE:BABA is still treated as a second-tier asset. One set of forward estimates puts the stock on about 16.6x next year’s earnings, another around 20x at the current $149–150 print; in both cases it trades at a steep discount to U.S. megacaps. Amazon and Alphabet sit in the high-20s forward P/E range, while BABA is paying for double-digit top-line growth and 34% cloud growth at roughly two-thirds of that multiple. Price-to-Sales is about 2.1x for Alibaba versus roughly 3.0x for Amazon and close to 9.9x for Alphabet, despite near-term revenue growth expectations for BABA around 10%, roughly in line with Amazon and only a few points below Alphabet. Within China, Baidu trades at around 14.7x forward earnings and Tencent at about 16.5x, but neither combines a 34% domestic cloud infrastructure share, proprietary AI chips, a scaling model portfolio and a dominant commerce platform to the same degree. Over the last decade NYSE:BABA has averaged roughly 20.5x forward earnings; the fact that it trades around that long-term mean at the exact moment its AI thesis is finally visible tells you the market has not repriced the optionality. A move to a 24–26x forward multiple on current earnings power supports a $190–$210 range, which implies approximately 25–40% upside from $149–150 without assigning any value to longer-dated AI upside beyond the current plan.

China Macro, Policy Risk And Why The Discount Persists

The structural discount is driven by macro and policy, not by the quality of NYSE:BABA’s assets. Even with China posting a goods trade surplus north of $1T, investors remain skeptical about the sustainability of growth, the ongoing clean-up of the property sector and the long-term regulatory stance toward large internet platforms. The previous crackdown on Chinese big tech is not forgotten and justifies some permanent risk premium. U.S.–China tech tensions add a second layer: export controls on top-end GPUs, scrutiny of cloud deployments and broader geopolitical friction all feed into a higher required return for foreign capital. Alibaba has mitigated some of this with ex-China data centers and partnerships, and with domestic chip initiatives like T-Head, but the headline risk does not go away. Positioning metrics reflect the same story: global portfolios are heavily overweight U.S. AI leaders and underweight China, quant models still tend to cluster BABA as a “Hold” because of earnings volatility and country risk, while fundamental analysts lean Buy or Strong Buy. That gap between fundamentals and capital flows is exactly why the multiple has not yet expanded.

Technical Structure, Trading Levels And Market Behavior In NYSE:BABA

Technically, NYSE:BABA has already completed a major washout and is now consolidating. The stock has climbed from a 52-week low near $80.06 to the current band around $150, with clear resistance in the $190–$200 zone where a valuation re-rating would naturally stall on the first attempt. Price action into the recent quick commerce–driven selloff shows buyers stepping in around the mid-$140s to low-$150s, confirming that the market is prepared to defend that area as support. Below that, the $130 region is the real line that longer-term bulls will want to see hold; a break under that would raise questions about the timing of the AI monetization story rather than its existence. Options pricing and implied volatility term structure indicate that the market is not positioned for a one-way move; it treats BABA as a high-beta China tech name with two-sided risk, not as a consensus AI core holding. That misclassification is where the asymmetric opportunity sits if sentiment on China or AI cyclicality improves.

Capital Allocation, Buybacks, Dividend Profile And Governance Signals

On capital returns, NYSE:BABA is clearly prioritizing growth over payouts. The dividend yield is modest, around 0.7% at $149–150, and buybacks have been sharply scaled back to roughly $300M in the last quarter from much higher levels a year earlier, despite a $25B program expansion announced in 2024. Free cash flow is being redirected toward AI and cloud CapEx and into protecting the relevance of retail and quick commerce; that is rational if you believe CIG will compound at 30%+ and expand margins off a depressed base, but it disappoints investors who want steady FCF per share. For a clean view of insider behavior, governance and ownership shifts, the BABA stock profile and insider transactions page are critical. Insider buying into weakness and stable long-only institutional ownership would confirm that local capital is aligned with the AI thesis, while persistent insider selling or a sharp drop in core holders would undermine the bull case. For real-time price action, liquidity and technical levels, the NYSE:BABA real-time chart is the reference point to anchor any trading decisions.

Final Verdict On NYSE:BABA – Bullish Rating With 25–40% Upside On AI Re-Rating

At around $149.79 per share, NYSE:BABA gives you a 34% growth cloud business, a 34% share in China’s cloud infrastructure market, proprietary AI chips, a competitive LLM stack and a dominant commerce ecosystem for roughly 20x forward earnings and about 2.1x sales. The trade-off is clear: you are accepting earnings volatility from quick commerce reinvestment, a thin dividend, weak buybacks and real China and policy risk. In exchange, you are buying a full-stack AI hyperscaler at a discount multiple that does not reflect its strategic position. On the data you provided, the correct stance is Buy, with a reasonable 12–24 month value band around $190–$210, implying roughly 25–40% upside if the market simply prices BABA at a mid-20s forward P/E, still below U.S. peers. The stock remains mis-categorized as a stressed China retailer when it is already functioning as an underpriced AI and cloud infrastructure platform with substantial embedded optionality.

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