Why Wall Street Is Betting on Alibaba Stock Gaining 70% From Here
Despite the recent dip, analysts continue to see significant upside in Alibaba stock. The company's fundamentals remain robust, supported by steady performance in its core digital commerce operations. Moreover, Alibaba's strategic push into artificial intelligence (AI) and cloud computing is seen as a powerful catalyst for long-term growth.
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Wall Street's confidence in Alibaba is evident in the consensus among analysts. A large majority remains positive on the stock, and the highest price target currently stands at $180, implying an impressive 69% upside from current levels.
Against this backdrop, let's explore the key drivers behind analysts' confidence in this Chinese e-commerce powerhouse and what factors could help push BABA stock higher.
As digital transformation sweeps across global markets, Alibaba's investments in cloud computing, artificial intelligence (AI), and core e-commerce platforms position it well to deliver significant growth by capitalizing on the growing demand across these key sectors. Further, Alibaba's diversified business model, strong execution, and innovation are setting the stage for solid growth, which could push its share price higher.
The group's e-commerce arms, Taobao and Tmall, continue to show strong user engagement, supported by improving monetization strategies and growing consumer demand. During the most recent quarter, the Taobao and Tmall Group (TTG) reported 12% year-over-year growth in customer management revenue. Alibaba's enhanced marketing tools, like Quanzhantui, are driving increased merchant participation, contributing to higher take rates and improved marketing efficiency. User acquisition efforts are also paying off, with 88VIP memberships surpassing 50 million.
Meanwhile, Alibaba Cloud is emerging as a significant growth engine. In the latest quarter, revenue from cloud services rose 18%, with continued acceleration in public cloud revenue. Moreover, its AI-related product lines maintained triple-digit year-over-year growth for the seventh consecutive quarter. For the full fiscal year, cloud revenue grew in double digits, and management anticipates that AI will be a key catalyst for acceleration in its growth rate. Despite global supply chain uncertainties in AI hardware, demand for Alibaba's cloud solutions remains resilient, positioning it well to deliver solid growth in the coming quarters.
Alibaba is ramping up investment in advanced technologies and infrastructure to maintain global leadership in the AI and Cloud space. As these capabilities mature, they are expected to provide recurring, high-margin revenue streams and reinforce Alibaba's position in the enterprise technology landscape.
The company's cross-border e-commerce business is also contributing meaningfully, with Alibaba International Digital Commerce (AIDC) growing 22% last quarter. This performance reflects both strong global demand and operational improvements.
Alibaba also monetized its non-core financial assets, enhancing its balance sheet and providing capital flexibility to support strategic investments and shareholder returns.
Despite its multiple growth catalysts, Alibaba stock remains undervalued. Trading at just 11.1 times forward earnings, the stock is priced at a discount to its earnings growth potential. Analysts project 13.7% bottom-line growth in fiscal year 2026 and 18.5% for 2027, highlighting a disconnect between Alibaba's market valuation and its growth trajectory.
While Alibaba stock has witnessed a pullback, Wall Street's conviction in BABA remains firm. Analysts' 'Strong Buy' consensus rating suggests that the dip is a compelling entry point into a fundamentally strong company poised for long-term growth.
With a diversified business model, accelerating momentum in AI and cloud computing, and solid performance across its core and international commerce platforms, Alibaba is well-positioned to deliver strong growth. Moreover, Alibaba stock's undervaluation strengthens the bullish case.
With analysts projecting about 69% upside potential, BABA is a discounted growth powerhouse that could reward patient investors.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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