TLDR
- Alibaba stock jumped 47% year-to-date with analysts targeting 20% additional gains
- Q1 earnings due August 29 with forecasts of $2.06 per share on $35.35 billion revenue
- Hong Kong approved Banma autonomous driving unit spin-off reducing Alibaba’s stake to 30%
- Margin pressure from food delivery competition weighs on profitability outlook
- Strong Buy consensus with 12 Buy ratings and $148.55 average price target
Alibaba’s stock has delivered impressive returns this year, climbing over 47% as investors embrace the Chinese e-commerce leader’s artificial intelligence and cloud computing strategy. Wall Street remains optimistic heading into the company’s August 29 earnings announcement.
Analysts expect Alibaba to report first-quarter earnings of $2.06 per share on revenues of $35.35 billion. The revenue forecast represents 5% growth compared to the prior year period.
The company’s cloud division continues driving growth momentum, with analysts projecting 20% revenue expansion for the June quarter. Alibaba has committed more than $50 billion over three years to build AI infrastructure for its cloud operations.
Technical Recovery and Market Dynamics
Alibaba shares recently reclaimed the 21-day moving average after gaining over 3% to reach $122.47. The stock now trades near a technical buy point of $123.99, according to market analysis.
Chinese technology stocks rallied broadly following DeepSeek’s launch of an AI model optimized for domestic semiconductors. This development eased investor concerns about U.S. export restrictions limiting Chinese AI advancement.
Federal Reserve Chairman Jerome Powell’s comments about potential interest rate cuts also boosted market sentiment across technology sectors.
Strategic Restructuring Plans
Hong Kong regulators granted initial approval for Alibaba to spin off Banma Network Technology through an initial public offering. The transaction would reduce Alibaba’s ownership from 44.7% to approximately 30%.
This restructuring could improve capital allocation efficiency while allowing greater focus on core cloud and AI initiatives. The spin-off would provide investors clearer visibility into Banma’s autonomous driving business performance.
Competitive Pressure and Analyst Views
Top-rated Mizuho analyst Wei Fang recently lowered his price target from $160 to $149, citing intensifying margin pressure. Competition in local commerce, especially food delivery services, is squeezing profitability for major players.
Fang anticipates sharp margin declines in Q1 compared to the previous quarter. He warns this pressure could continue through 2025 and 2026 without regulatory intervention to moderate pricing competition.
Mizuho reduced its Q1 EBITDA estimate from 55 billion yuan to 45 billion yuan and cut its fiscal 2027 EBITDA projection to 231 billion yuan.
Despite margin concerns, 92% of Wall Street analysts maintain bullish ratings on Alibaba’s long-term fundamentals. The average price target of $148.55 suggests 20.83% upside potential from current levels, supporting a Strong Buy consensus rating with 12 Buy recommendations and one Hold rating.
