Shares of the Chinese tech giant Alibaba (BABA) are staging a solid comeback, rising nearly 70% in one month. The stock has outperformed its tech peers over the past year, gaining 90% during the same period.
The growth in Alibaba stock reflects an acceleration in its core businesses of e-commerce and artificial intelligence (AI) plus cloud services following a transformative year that saw the completion of divesting its offline assets.
Strong Quarterly Performance
Alibaba’s core businesses are thriving, which is evident in its latest quarterly performance. Revenue from its flagship e-commerce platforms, Taobao and Tmall, climbed 5% in the December quarter, driven by a 9% increase in customer management revenue (CMR). This growth reflects a rise in gross merchandise volume (GMV) and a better take rate, enhanced by the full-quarter impact of software service fees and the growing adoption of Quanzhantui, Alibaba’s AI-powered digital marketing tool.
The company’s premium consumer segment, 88VIP, continues to expand rapidly, reaching 49 million members. This high-spending customer group is growing in size and demonstrating profitability, reinforcing the long-term potential of Alibaba’s loyalty programs.
Alibaba’s global reach also supports its growth. Revenue from Alibaba International Digital Commerce (AIDC) surged 32% in the latest quarter, powered by strong cross-border business performance. International commerce retail sales grew by 36%, thanks to rising demand on AliExpress and Trendyol, while wholesale international commerce revenue increased by 18%, benefiting from cross-border value-added services.
Alibaba’s Cloud Intelligence Group also delivered solid results, posting a 13% revenue increase. Excluding its consolidated subsidiaries, the segment’s revenue grew 11%, primarily driven by robust demand for public cloud services, particularly AI-driven solutions. As AI continues to reshape industries, Alibaba’s cloud division is well-positioned to capture a significant share of this fast-growing market.
Alibaba’s Growth Prospects Remain Strong
Alibaba continues to solidify its position as a leader in the AI and cloud computing space, a strategy that sets the stage for significant long-term growth. The company’s focus on integrating AI into its cloud business is proving highly effective, with its AI-powered products driving robust revenue gains. In fact, for six consecutive quarters, AI-related product revenue has maintained triple-digit year-over-year growth. As industries rapidly adopt AI technology, demand for Alibaba Cloud services is soaring, and the company expects this momentum to accelerate even further.
Beyond cloud computing, Alibaba’s e-commerce business remains strong. Its investments in Taobao and Tmall are fueling growth in new customer acquisition and order volume. At the same time, its 88VIP membership program is expected to see sustained expansion as Alibaba enhances benefits and premium services. The company is introducing initiatives to support merchants that create a more business-friendly environment, ensuring a stronger and more sustainable platform for long-term growth.
Alibaba is improving operational efficiency, particularly in its AIDC segment. These efforts are on track to deliver the business's first profitable quarter in the next fiscal year. Additionally, other internet platform businesses within Alibaba’s ecosystem are showing improved efficiency, further strengthening the company’s financial health.
The Bottom Line on Alibaba Stock
Alibaba is doubling down on its e-commerce and cloud operations and optimizing its underperforming segments to maintain its competitive edge. This strategy is paving the way for long-term profitability.
Moreover, Alibaba is actively enhancing shareholder value. It continues to optimize its balance sheet through strategic non-core asset sales, aggressive share buybacks, and favorable debt restructuring. Further, the company is making sizable investments to capitalize on the booming AI industry.
Thanks to these factors, Wall Street analysts remain optimistic about Alibaba’s future, with a “Strong Buy” consensus rating on the stock. Moreover, trading at a price-sales ratio of 2.3x and a forward price-earnings ratio of 16x, Alibaba’s valuation looks attractive, especially given its strong growth trajectory.
