Alibaba's AI Expansion, E-Commerce Growth Reinforce Bullish Analyst Outlook

Alibaba Group Holding BABA stock gained after multiple Wall Street firms raised their respective price targets on the stock on Friday.

Among them was Benchmark analyst Fawne Jiang, who maintained a Buy rating on Alibaba with a price target of $190, up from $118.

Jiang noted that Alibaba is undergoing a long-awaited structural restructuring, driven by a rebound in its core e-commerce business, an improved earnings outlook thanks to better investment efficiency and growth reacceleration, and the recognition of asset value in key strategic areas such as AliCloud and Alibaba International Digital Commerce Group.

Also Read: Alibaba Q3 Earnings: Revenue And EPS Beat, Eyes Global E-Commerce Profitability In FY25, Increase Investments In AI

Despite strong stock performance year-to-date, Alibaba remains reasonably valued relative to global hyperscalers (~30x forward P/E). With the momentum of accelerated AI adoption in China, the analyst noted Alibaba as a leading player in China’s AI sector.

Alibaba’s third-quarter earnings checked all the boxes and more. This includes a notable reacceleration of growth across its core e-commerce and cloud businesses, a return to profit growth for Taobao and Tmall Group, and a clear pathway to profitability for AIDC and other loss-making assets.

More importantly, the drivers behind this core reacceleration appear sustainable, supported by a take rate increase for TTG and expedited adoption of AI Cloud.

To capitalize on this, Alibaba announced an aggressive capex plan, with total capex over the next three years set to exceed the past decade’s investments. This reflects both the surge in demand and the company’s determination to lead in this transformative era.

Jiang reiterated that full-stack service providers with strong infrastructure capabilities would be the primary beneficiaries.

Alibaba stands out with its competitive edge in infrastructure, proprietary models, and application capacity across diverse use cases.

While the stock has risen significantly in the past two months, Jiang noted that a structural rerating is driven by upward earnings revisions and multiple expansions catalyzed by technological innovations. Positive tariffs or macroeconomic developments could further enhance the upside potential.

Price Action: BABA shares traded higher by 5.6% at $143.68 at the last check on Friday.

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