Is Alibaba Stock (BABA) a Buy, Hold, or Sell?

Business Insider

26-05-2025

Alibaba (BABA) is doubling down on artificial intelligence, aiming to use it to transform online shopping and cloud services. It is using AI across its apps and cloud platform to improve customer experience, make business operations smoother, and stay ahead of the competition. At the recent Alibaba Cloud Go-Global Conference, CEO Eddie Wu said the company is now speeding up efforts to take its AI products overseas. This includes plans to roll out large language models like Qwen and Model Studio in global markets, helping Chinese businesses expand and growing Alibaba's presence worldwide.
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According to TipRanks AI analyst, BABA stock scored 81 out of 100 with an Outperform rating. Despite some near-term challenges, Wall Street remains optimistic about the stock. Notably, the stock is up 42% year-to-date and about 50% over the past year. Let's take a closer look at what's driving sentiment around BABA stock.
BABA Stock's Bullish Case
According to TipRanks AI analyst, Alibaba stock's strong score reflects solid financials, decent fourth-quarter earnings, and a fair valuation. A major reason behind this outlook is Alibaba's expanding role in artificial intelligence. The company is using AI in two key areas. It offers the cloud services that support AI development across China and also adds AI features to its own apps like Taobao and Tmall. As demand for AI grows—especially for training and running models—Alibaba is in a good spot to benefit both as a provider and as a user.
During the latest earnings call, Alibaba's cloud division was a standout. Revenue rose by 18%, and profit margins came in better than expected, reflecting that the company is managing costs well and could see steady growth as more Chinese businesses turn to cloud-based AI solutions.
Furthermore, in its main e-commerce segment, customer management revenue from Taobao and Tmall rose 12%, indicating that recent efforts to improve user experience and monetization are working. It also shows that Alibaba continues to hold strong in China's large and competitive online retail space.
Near-Term Pressures Remain
Still, there are some short-term challenges. Alibaba's investments in food delivery and logistics have reduced margins, and management expects these costs to stay elevated for now. The Local Services Group (LSG) and Cainiao logistics unit both reported losses that were larger than expected. While these areas are important for fast delivery and fulfillment, they have yet to scale efficiently.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain highly bullish about Alibaba's stock trajectory. With 13 unanimous Buy ratings, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $164.50 implies 36.25% upside potential from current levels.