TLDR
- Alibaba stock is down over 7% this year, trading at 16x forward earnings — below its 10-year average of 19x
- Earnings are due March 19, with EPS expected at $1.67, down 43% year-over-year, on revenue of $42.1 billion
- Morgan Stanley has named BABA its top pick in China tech, replacing Tencent
- Mizuho has a $195 price target on BABA, with a sum-of-the-parts valuation suggesting upside to $213
- Morgan Stanley sees China’s AI chip TAM hitting $67 billion by 2030, with 76% domestic self-sufficiency
Alibaba has had a rough start to 2026. The stock is down more than 7% year-to-date, weighed down by fears around AI competition, questions about its internal strategy, and broader concerns over Chinese consumer spending.
Alibaba Group Holding Limited, BABA
But a growing number of Wall Street analysts think the selloff has gone too far.
The stock currently trades at 16 times forward earnings estimates. That’s below its 10-year average of 19x and well below Amazon at around 26.5x. Barron’s noted the stock looks technically oversold.
Alibaba reports its fiscal Q3 earnings on March 19. Analysts expect EPS of $1.67, down 43% from a year ago, on revenue of $42.1 billion — a 9% increase.
The earnings drop is large, but the revenue growth tells a different story. Management will have a chance to address investor concerns directly on the call.
One of the biggest question marks is Alibaba’s Qwen AI unit. There have been reports of a management shake-up and executive departures there, raising concerns about internal disagreements over AI direction.
Citigroup analyst Alicia Yap flagged those reports. But she also pointed out that Qwen saw strong order demand during the Chinese Lunar New Year, a key demand signal.
Qwen is now integrated across Alibaba’s core consumer platforms — Tmall, Taobao, Freshippo, and Alipay. That’s a broad distribution footprint for an AI product.
Cloud Business Getting Overlooked
Mizuho analyst Wei Fang argues that Alibaba’s cloud segment is being undervalued by the market. She describes the company’s fundamentals as “incrementally healthier, driven by AI-accelerated growth.”
Fang calls Alibaba’s cloud assets the best in China. The division competes directly with Amazon Web Services, Google Cloud, and Microsoft Azure.
Her official price target is $195 per share — 43% above current levels. A sum-of-the-parts analysis puts potential value even higher, at $213 per share, with the bulk coming from e-commerce and cloud.
She also notes that Alibaba’s other business lines, plus its cash and investments, are worth around $25 per share on their own.
Morgan Stanley Makes It a Top Pick
Morgan Stanley went further this week, naming Alibaba its top investment pick in the China tech space — replacing Tencent.
The bank highlighted Alibaba’s control across the full AI stack: chips, cloud infrastructure, foundational models, and consumer-facing applications.
On AI chips specifically, Morgan Stanley says Alibaba’s self-developed chips are top-tier. They rank the company as China’s leading and the world’s fourth-largest cloud infrastructure provider.
The bank also points to Alibaba’s open-source AI models, which have seen wide global adoption.
Looking ahead, Morgan Stanley forecasts the total addressable market for AI chips in China will reach $67 billion by 2030. They expect domestic self-sufficiency in AI chip production to hit 76% by that time.
Alibaba reports earnings on March 19.
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