Latest news with #Quanzhantui
Yahoo
27-05-2025
- Business
- Yahoo
Alibaba vs. JD.com: Which Chinese E-Commerce Stock Has More Upside?
Alibaba Group BABA and JD are two of China's largest e-commerce players, each playing a critical role in shaping the country's digital economy. While Alibaba has expanded into cloud, AI, and international markets, continues to build on its strength in supply chain and core retail. Both companies are also tapping into new growth areas like food delivery and instant commerce to stay ahead in a competitive China's economy gradually stabilizing and digital consumption rebounding, investors are watching closely to see which platform offers stronger, more sustainable growth. Let's break down their latest earnings and strategies to find out which stock has the greater upside potential. Alibaba has been benefiting from its continued pivot toward AI, international e-commerce and retail. In the fourth quarter of fiscal 2025, the company reported $32.81 billion in revenues, up 6.96% year over year. The Taobao and Tmall Group has been steadily improving monetization through the rollout of a 0.6% software fee and BABA's AI-powered digital marketing tool Quanzhantui, which has helped drive a 12% rise in customer management company's loyalty base has also expanded, with 88VIP members surpassing 50 million, supporting higher user retention. 88VIP is Alibaba's premium paid membership program through which members can enjoy exclusive benefits across the company's international commerce segment has been growing rapidly, up 22% year over year in the last reported quarter, as the company continues to localize supply chains and refine models like AliExpress Choice, which have been improving unit economics and narrowing company has also been seeing strong results from its investments in AI developments. Alibaba Cloud revenues rose 18%, with AI product revenues continuing triple-digit year-over-year growth for the seventh straight quarter. Its open-sourced Qwen3 AI model family, launched in April, had been downloaded more than 300 million times by April end, driving adoption across multiple has been expanding its instant commerce push with a RMB 10 billion investment into Taobao Shango and which has already shown promising early results in user engagement and Alibaba has been streamlining its focus by exiting non-core assets like Sun Art and Intime, and redirecting capital into scalable segments. has been benefiting from its focus on supply chain strength, price competitiveness and retail expansion into lower-tier markets. In the first quarter of 2025, JD reported $41.79 billion in revenues, up 16.01% year over year, supported by continued growth in core retail. Electronics and home appliances rose 17%, and general merchandise grew 15%, with supermarket and fashion categories maintaining double-digit growth for five consecutive engagement has been rising steadily. JD has been enhancing shopping frequency and ARPU through AI-powered recommendations, better after-sales services, and personalized delivery features. The company reported more than 20% year-over-year growth in active customers in the last reported 3P marketplace has been expanding with more merchants and SKUs, especially in value-driven markets. This has been driving 16% year-over-year growth in marketing and marketplace revenues, with the low-price strategy resonating across lower-tier has also been aggressively expanding into food delivery, nearing 20 million daily orders. It has been onboarding merchants at zero commission, offering full rider insurance, and leveraging its retail infrastructure for scale. These efforts have been helping build cross-platform user Logistics has been contributing with 11% revenue growth, driven by continued automation in warehousing and last-mile delivery. The company's gross profit rose 20%, and non-GAAP net income surged 43% year over year to RMB 12.8 billion, highlighting strong margin has also been investing in AI ad automation, expanding Jingxi in rural areas and and enhancing user operations to drive long-term growth through improved platform efficiency and stronger user engagement. Performance metrics strengthen Alibaba's case. Year to date, shares of BABA have rallied 42.4%, while JD shares have lost 3.8%. Alibaba has also outperformed the broader Zacks Retail-Wholesale sector's growth of 0.6% and the S&P 500 index's decline of 1.8%. JD has underperformed both. Alibaba's outperformance comes despite ongoing concerns about China's economy, showing growing investor confidence in its diversified business model and focused strategy. Image Source: Zacks Investment Research In terms of valuation, BABA's current forward 12-month P/E ratio of 11.13X is ahead of JD's 7.63X. Although BABA is trading at a significant premium compared to JD, the premium valuation reflects investor confidence in the company's growth potential for the rest of 2025. In contrast, JD's current forward 12-month P/E ratio indicates more cautious market sentiment around its near-term performance. Image Source: Zacks Investment Research The Zacks Consensus Estimate for BABA's first-quarter fiscal 2026 earnings is pegged at $2.48 per share, which has been revised upward by 4.6% over the past seven days, indicating a 9.73% increase year over year. The consensus estimate for first-quarter revenues is pinned at $34.85 billion, suggesting year-over-year growth of 4.13%. Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote The Zacks Consensus Estimate for JD's second-quarter 2025 earnings is pegged at 97 cents per share, which has remained steady over the past seven days, indicating 24.81% year over year decline. The consensus estimate for second-quarter revenues is pinned at $46.85 billion, suggesting a year-over-year increase of 16.85%. Inc. price-consensus-chart | Inc. Quote While both and Alibaba are growing, Alibaba is the better pick for investors right now. It has been gaining from strong momentum in cloud, AI and international e-commerce. Its fourth-quarter fiscal 2025 results showed steady growth, with cloud revenues up 18% and AI products growing fast for the seventh straight quarter. Alibaba is also expanding into instant delivery through and Taobao Shango, adding new ways to engage users. JD is facing losses in its new business segment, particularly food delivery, and aggressive investments in AI, automation, and logistics are weighing on its near-term profitability. Hence, with a more balanced business and proven innovation, Alibaba offers more upside with less BABA has a Zacks Rank #3 (Hold), making the stock a better pick compared with JD, which has a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (JD) : Free Stock Analysis Report Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
19-05-2025
- Business
- Yahoo
Alibaba Shares Fall Despite Accelerating AI Growth. Is It Time to Buy the Dip?
Alibaba stock sank after its earnings results disappointed investors. However, the company continued to show strong progress with its turnaround plan. Meanwhile, the stock remains cheap at current levels. 10 stocks we like better than Alibaba Group › Alibaba (NYSE: BABA) stock has had a good start to 2025, but it was giving back some of its gains after its fiscal fourth-quarter earnings report disappointed investors. The stock is still up about 45% on the year, as of this writing. That said, the results clearly showed that the turnaround at the company's e-commerce business is progressing, while it continued to demonstrate strong artificial intelligence (AI) growth within its cloud-computing segment. Let's take a closer look at Alibaba's most recent earnings to see if investors should buy the dip. Alibaba's largest and most important business by far remains e-commerce, which consists of its leading Tmall and Taobao platforms. Tmall is similar to Amazon's marketplace business and is where established brands sell their merchandise. Taobao is more akin to eBay, but without the auction format, where anyone can sell their goods. In the past few years, the company's e-commerce business has been under pressure from a weak Chinese economy and heavy competition led by PDD's popular Pinduoduo platform. However, the company has been investing in its e-commerce business to make it more competitive, and its efforts began to show up this fiscal year, first through gross merchandise value (GMV) growth and then later with revenue and earnings before interest, taxes, and amortization (EBITA) growth. This continued in fiscal 2025's Q4 (ended March 31, 2025), with the e-commerce segment growing its revenue 9% year over year to $14 billion, including 12% growth in its important third-party business. Alibaba credited the growth to a higher take rate from an earlier new software service fee it implemented and increasing uptake of its new AI marketing tool, Quanzhantui. Importantly, its segment EBITA climbed 8% to $5.8 billion. This shows its e-commerce business is not just growing but growing profitably. It said it continues to see strong new customer growth along with continuous increases in orders. Its 88VIP premium memberships continued to grow by double digits, topping 50 million members. Alibaba plans to invest heavily in "instant commerce" whereby customers can get items purchased on its Taobao platform delivered within an hour. Management thinks this can become a 1 billion consumer market opportunity. It also extended a deal with social media platform Rednote (akin to Instagram) to have Taobao links directly embedded in its posts. Its cloud-intelligence group, or cloud-computing segment, saw revenue growth accelerate to 18% in the quarter, as revenue came in at $4.2 billion. It said its AI products were seeing broader adoption across industries, helping lead to its seventh consecutive quarter of triple-digit, AI-related growth. The segment's adjusted EBITA, meanwhile, soared 69% to $333 million. The company is expecting to see significant cloud-computing revenue growth over the next few quarters. The company's other businesses also generally showed strong revenue growth, although they largely remain unprofitable. Its international commerce segment (AIDC), which includes AliExpress, once again led the way, with revenue climbing 22% to $4.6 billion. However, its segment EBITA came in at negative $492 million. The company is still looking for the unit to become profitable this year despite tariffs. Overall, Alibaba's revenue increased 7% to $32.6 billion, while adjusted EBITA jumped 36% to $4.5 billion. Its adjusted earnings per American depositary share (ADS) climbed 23% to $1.73. Its operating cash flow rose 18% to $3.8 billion, but its free cash flow plunged 76% to $516 million as it invested heavily in data center infrastructure. It was still able to generate $10.2 billion in free cash flow for its fiscal year. Alibaba ended the quarter with $51.6 billion in cash and short-term investments and $31.8 billion in debt. It also had $56.6 billion in equity and other investments on its balance sheet. While investors were hoping for even more from Alibaba, the company continued to show strong progress in its turnaround. It's really made some nice strides with its domestic e-commerce business to return it to growth. Instant commerce could become a big differentiator, while its partnership with Rednote looks like a smart move. Meanwhile, its Quanzhantui AI marketing tool continues to gain adoption. The company's cloud-computing business is seeing strong growth and nice operating leverage. While AI competition is fierce in China, Alibaba has become one of the country's leading AI players. In addition, if the company can turn its AIDC business profitable, that will be a big profitability driver this fiscal year. Currently, it has a lot of money-losing emerging ventures it is trying to develop. Trading at a forward price-to-earnings (P/E) ratio of around 12 times fiscal 2026 analyst estimates, the stock remains cheap, albeit not as cheap as it was much of last year. But between its continued turnaround and valuation, this looks like a good opportunity to buy on the dip. Before you buy stock in Alibaba Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alibaba Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor's total average return is 975% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and eBay. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy. Alibaba Shares Fall Despite Accelerating AI Growth. Is It Time to Buy the Dip? was originally published by The Motley Fool
Yahoo
16-05-2025
- Business
- Yahoo
Alibaba Q4 Earnings Surpass Estimates, Revenues Increase Y/Y
Alibaba BABA reported non-GAAP earnings of $1.73 per ADS in the fourth quarter of fiscal 2025, which beat the Zacks Consensus Estimate by 16.89%. In domestic currency, the company reported earnings of RMB 12.52, up 23% year over company posted fourth-quarter fiscal 2025 revenues of $32.6 billion. The top line missed the Zacks Consensus Estimate by 1.49%. In domestic currency, revenues of RMB 236.5 billion increased 7% year over top-line increase was driven by the strong performance of its core domestic e-commerce segment, Taobao and Tmall Group. Additionally, significant contributions came from the continued expansion of the Cloud Intelligence Group and robust growth in International Digital Commerce, which played key roles in driving overall revenue the release, BABA shares rose 1.65% in the pre-market trading. Year to date, BABA shares have jumped 46.2%, significantly outperforming the Zacks Retail and Wholesale sector's 2.4% return over the same period. Alibaba Group Holding Limited price-consensus-eps-surprise-chart | Alibaba Group Holding Limited Quote BABA's earnings beat the Zacks Consensus Estimate twice and missed in the remaining two, the surprise being 2.47%, on average. (See the Zacks Earnings Calendar to stay ahead of market-making news.) Taobao and Tmall Group (42.9% of total revenues): Alibaba generated RMB 101.37 billion ($14.0 billion) of revenues from the segment, which increased 9% from the year-ago quarter. Its customer management revenues grew 12% year over year to RMB 71.08 billion ($9.8 billion), driven primarily by an improved take rate. This improvement was supported by the introduction of software service fees and the growing adoption of Quanzhantui, Alibaba's comprehensive marketing solution, which helped boost monetization efficiency across the number of 88VIP members, BABA's highest-spending consumer group, continued to increase year over year in the double digits to 50 million in the quarter. The company will continue to grow the subscription of 88VIP membership by providing attractive benefits and premium Commerce Retail (94.3% of Taobao and Tmall revenues): The business vertical's revenues were RMB 95.6 billion ($13.2 billion), reflecting an 8% increase from the year-ago quarter. The rise was attributed to customer management revenues, which grew 12% year over year to RMB 71.08 billion ($9.9 billion), driven by the year-over-year improvement in take rate, partially offset by the decrease in direct sales revenues as a result of the company's planned reduction of certain direct sales Commerce Wholesale (5.7% of Taobao and Tmall revenues): The business generated revenues of RMB 5.8 billion ($798 million), which grew 17% on a year-over-year basis. This upside was attributed to increasing revenues from value-added International Digital Commerce Group (14.2% of total revenues): The segment comprises Lazada, AliExpress, Trendyol, and other businesses operating in the international retail and wholesale markets. BABA generated RMB 33.6 billion ($4.63 billion) in revenues from the segment, which grew 22% from the year-ago quarter, primarily driven by the strong performance of cross-border Commerce Retail (82.2% of international revenues): Revenues were RMB 27.6 billion ($3.80 billion), up 24% from the year-ago quarter, driven by the increase in revenues contributed by AliExpress' Choice and Commerce Wholesale (17.8% of international revenues): The business generated revenues of RMB 6 billion ($823 million), which increased 16% on a year-over-year basis due to an increase in revenue generated by cross-border related value-added Services Group (6.8% of total revenues): The segment's revenues grossed RMB 16.1 billion ($2.22 billion), up 10% from the year-ago quarter. The rise was driven by strong order growth in the and Amap businesses, along with higher revenues from marketing Smart Logistics Network (9.1% of total revenues): Revenues were RMB 21.6 billion ($2.97 billion), down 12% from the year-ago quarter. The decrease was primarily attributed to reduced revenues from domestic logistics services, as a result of its e-commerce businesses taking on a certain logistics platform Intelligence Group (12.7% of total revenues): The segment generated revenues of RMB 30.1 billion ($4.15 billion), up 18% from the year-ago quarter. In the quarter, overall revenues, excluding Alibaba-consolidated subsidiaries, achieved double-digit year-over-year growth of 17%. This momentum was primarily driven by an accelerated growth in public cloud revenues, including the rising adoption of AI-related products and April, Alibaba introduced the Qwen3 series — next-generation hybrid reasoning models that combine fast responses with advanced chain-of-thought capabilities. The lineup includes two Mixture-of-Experts (MoE) models and six dense models. All Qwen3 models have been fully open-sourced on platforms like ModelScope and Hugging Face to promote broad adoption and Media and Entertainment Group (2.3% of total revenues): Revenues were RMB 5.6 billion ($765 million), up 12% from the year-ago quarter. The rise was mainly driven by the strong performance of the movie and entertainment segment of Alibaba Others (22.8% of Total Revenues): The segment's revenues were RMB 54 billion ($7.44 billion), reflecting a 5% year-over-year increase. This rally was primarily driven by higher revenue contributions from Freshippo and Alibaba Health, partially offset by a decline in revenues from Sun Art following its sale and deconsolidation in February 2025. In the fiscal fourth quarter, sales and marketing expenses were RMB 36.2 billion ($4.99 billion), up 25.5% from the year-ago quarter. As a percentage of total revenues, the figure expanded 230 basis points (bps) to 15.3%.General and administrative expenses were RMB 10.3 billion ($1.42 billion), down 26.3% from the year-ago quarter. As a percentage of total revenues, the figure contracted 190 bps year over year to 4.4%.Product development expenses were RMB 14.9 billion ($2.06 billion), up 6% year over year. As a percentage of total revenues, the figure remained flat year over income was RMB 28.5 billion ($3.92 billion), up 92.8% year over year due to the increase in impairment of intangible assets and a rise in adjusted EBITA. The operating margin expanded 540 bps to 12%.Adjusted EBITDA increased 36% from the year-ago quarter to RMB 32.6 billion ($4.5 billion). The adjusted EBITDA margin expanded 300 bps to 14%. As of March 31, 2025, cash and cash equivalents were $20 billion (RMB 145.49 billion), down from $22.3 billion (RMB 162.78 billion) as of Dec. 31, investments totaled $31.5 billion (RMB 228.83 billion) at the end of the fourth quarter of fiscal 2025, down from $32.5 billion (RMB 236.95 billion) in the previous generated $3.8 billion (RMB 27.52 billion) in cash from operations, down from $9.7 billion (RMB 70.92 billion) in the previous free cash flow was $516 million (RMB 3.74 billion). Alibaba currently carries a Zacks Rank #2 (Buy).Some better or similarly ranked stocks in the broader Zacks Retail-Wholesale sector are Advance Auto Parts AAP, Costco Wholesale COST and Canada Goose GOOS, each carrying a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks Auto Parts is scheduled to report first-quarter 2025 results on May 22. Costco Wholesale will release third-quarter fiscal 2025 results on May 29. Canada Goose is set to announce fourth-quarter fiscal 2025 earnings on May 21. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report Canada Goose Holdings Inc. (GOOS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
12-03-2025
- Business
- Yahoo
Have $500 to Invest? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now
With the market pulling back, it's time to go bargain-hunting and find some cheap stocks. It's a good reminder that markets will go up and down, but stocks tend to outperform over the long run. Let's look at three cheap stocks investors can start to dip their toes in and buy now with a small investment. I own all three. While Alibaba (NYSE: BABA) hasn't been suffering in this market sell-off, the Chinese e-commerce and cloud computing giant is still one of the cheapest stocks around. The stock trades at a forward price-to-earnings (P/E) ratio of less than 15 times 2025 analyst estimates, while it also has a boatload of cash and investments on its balance sheet as well. Meanwhile, the advances it has been making with artificial intelligence (AI) models have caught the attention of investors. The company has extolled the performance of its foundational AI model, Qwen 2.5-Max, which it uses as the basis for a number of specialized open-source AI models centered around language, audio, vision, coding, and mathematics. Last quarter, the company's cloud intelligence group grew its revenue by 13% to $4.3 billion, and its AI-related revenue surged by a triple-digit percentage for the sixth straight quarter. Meanwhile, the company has been letting low-margin project-based contracts roll off, which helped lift the cloud intelligence group's adjusted EBITA (earnings before interest, taxes, and amortization) by 33% to $430 million. At the same time, the company has started to see a meaningful turnaround in its e-commerce businesses, Tmall and Taobao. Taobao permits both businesses and consumers to sell on its platform, while Tmall is solely a business-to-consumer marketplace for established brands. Investments the company has made to grow its gross merchandise value (the total value of goods sold on its platforms) along with increasing use of its new AI marketing tool, Quanzhantui, and a new software service fee it implemented helped improve its results last quarter. Overall, the segment's revenue rose 5%, while revenues from its third-party business climbed by 9%. Overall, Alibaba is a cheap stock that is gaining momentum. The past year has been a difficult one for e.l.f. Beauty (NYSE: ELF) -- its shares have been cut by close to two-thirds as of this writing. However, this has left the stock in bargain territory, trading at a forward P/E of 23 times and a price/earnings-to-growth (PEG) ratio of 0.5. Typically, stocks with positive PEG ratios under 1 are viewed as undervalued. E.l.f. saw its shares tumble last month after it lowered its quarterly revenue growth forecast to only 1% to 2%, citing poor industry trends and the potentially disruptive impacts of a TikTok ban. The company markets heavily through influencers, so TikTok almost being banned in the U.S. in January had an impact. However, this is still a company that in the past few years has grown swiftly in the mass-merchant cosmetics space and taken a ton of market share away from competitors. At the same time, it has large opportunities in front of it. E.l.f has moved into the skincare market, which is growing nicely, but it can still expand into adjacent categories such as fragrance. It has also been making nice strides internationally. It's also worth noting that the cosmetic industry tends to do pretty well during recessions, as reflected in a phenomenon known as the lipstick index. While not 100% accurate all of the time, it is an observation that female consumers tend to be willing to spend more on small luxuries, such as cosmetics, when budgets are tight. The company is also expected to see shelf space gains at retailers later this year, including at important retail partner Target. All in all, this is a great time to scoop up shares of a leading company while they're down. Down about 20% over the past year, shares of Crocs (NASDAQ: CROX) are on the clearance rack, trading at a forward P/E of under 8. While the company's namesake brand has performed well, thanks in part to international growth, it has run into trouble with the HeyDudes brand that it acquired in early 2022. Turning around HeyDudes could be a big opportunity for the company, and it saw some progress on that front in the fourth quarter, when it reported flat sales for the brand year over year. The company is leaning into marketing and celebrity endorsers to push the brand. It is also targeting the young female demographic, a strategy that led to 160% growth in new female customers ages 18 to 24 during the quarter. While new HeyDudes products are selling well, the company still needs to continue to clear out older HeyDude inventory in its wholesale channel and return to full-price selling, but it finally made some good progress in that last quarter after some pretty big sales declines in prior periods. The Crocs brand, meanwhile, is expected to continue to be driven by international expansion, innovation, and its sandal business. Crocs continues to produce a ton of cash, including $923.2 million in free cash flow in 2024, so it has a lot of financial flexibility to pay down debt, buy back its undervalued shares, and invest in growth initiatives. It's a cheap stock to buy in this market. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $282,016!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,869!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $482,720!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 10, 2025 Geoffrey Seiler has positions in Alibaba Group, Crocs, and e.l.f. Beauty. The Motley Fool has positions in and recommends Target and e.l.f. Beauty. The Motley Fool recommends Alibaba Group and Crocs. The Motley Fool has a disclosure policy. Have $500 to Invest? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now was originally published by The Motley Fool
Yahoo
28-02-2025
- Business
- Yahoo
Alibaba Shares Jump on AI Gains as Momentum Continues. Is It Too Late to Buy the Stock?
Alibaba (NYSE: BABA) shares got a nice boost following the Chinese company's fiscal third-quarter results, which showed a nice rebound in its e-commerce business as well as strong artificial intelligence (AI) growth. The stock has had a tough past five years, losing about a third of its value, but it has been rallying lately. The stock is now up about 70% year to date and has nearly doubled over the past year as of this writing. Let's take a closer look at Alibaba's most recent earnings to see if the stock's rally can continue. Alibaba's largest business remains its e-commerce segment, which consists of leading Chinese e-commerce platforms Tmall and Taobao. Tmall is China's premier e-commerce marketplace where established brands sell their merchandise, while Taobao is a platform used by both individuals and businesses to sell merchandise. The company's e-commerce business has been under pressure the past few years from heavy competition, especially from PDD's Pinduoduo platform, as well as a weak Chinese consumer economy. However, the segment posted solid 5% growth in its fiscal third quarter (ended in December) to $18.6 billion, including 9% growth in its important third-party business. Alibaba credited the growth to higher gross merchandise value (GMV), which is the total value of goods sold through its platforms, and a high take rate (the fees charged by the platforms themselves). Management also noted that it was seeing more uptake of its new AI marketing tool Quanzhantui, and that it benefited from the new software service fee it implemented. Its segment earnings before interest, taxes, and amortization (EBITA) rose 2% to $8.4 billion. The company said it is also seeing solid customer growth. This included double-digit growth for its 88VIP premium memberships, which reached 49 million at the quarter's end. Its cloud intelligence group, or cloud computing segment, saw revenue jump 13% to $4.3 billion. AI-related revenue soared by triple digits for the sixth straight quarter. The segment's adjusted EBITA, meanwhile, climbed 33% to $430 million. The company touted its foundational AI model Qwen 2.5-Max, noting its industry-leading performance. Alibaba said it will invest aggressively in AI infrastructure, with plans to spend more in the next three years than it has over the last decade. It said its goal is to achieve AGI (artificial general intelligence), where AI can attain 80% of human capabilities. The company's other businesses also generally showed strong revenue growth, led by a 32% increase to $5.2 billion from its international commerce segment (AIDC). These emerging businesses continue to scale up but are currently largely unprofitable. However, management is looking for AIDC to turn in its first profitable quarter within the next fiscal year. That would be a big improvement from the $678 million EBITA loss it reported in the fiscal third quarter. Overall, Alibaba's revenue rose 8% to $38.4 billion. Adjusted earnings per American depositary share climbed 13% to $2.93, while adjusted earnings before interest, taxes, depreciation, and amortization rose 4% to $7.5 billion. Free cash flow came in at $5.3 billion. Alibaba ended the quarter with $54.8 billion in cash and short-term investments and $31.7 billion in debt. It also had $47.4 billion in equity and other investments on its balance sheet. Alibaba has invested heavily to help turn around its e-commerce businesses, and this quarter bore the fruit of those efforts. Its GMV had been improving, but this quarter, it was able to take that GMV growth and translate it into solid increases in revenue and EBITA. Its Quanzhantui marketing tool appears to be gaining traction, while there was no detrimental impact from the small technology service charge it introduced. The company also continues to be an AI leader in China. It recently won a deal with Apple to provide the AI behind Apple Intelligence in China, while it continues to see solid growth in its cloud computing unit. Meanwhile, it is still benefiting from a profitability standpoint as low-margin contracts expire. And the Chinese government appears to be fully behind the country's tech companies in the AI race. Alibaba founder Jack Ma, who had been persona non grata after criticizing China's financial sector in 2020, was recently photographed with other business leaders meeting with China's president, Xi Jinping. The Chinese government has had its differences with the tech sector in the past, but Xi has encouraged these companies to innovate and grow. That's all good news for a company like Alibaba. Looking at valuation, Alibaba stock remains cheap, trading at a forward price-to-earnings ratio (P/E) under 15 for fiscal 2026 analyst estimates and a price/earnings-to-growth (PEG) under 0.4, with PEGs below 1 usually view as undervalued. With the stock still inexpensive and a turnaround taking hold, Alibaba remains an attractive investment. The company is becoming a Chinese AI leader, which should help lift its valuation multiple, while flipping its AIDC business to profitability should also be a nice lift to earnings. Before you buy stock in Alibaba Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alibaba Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,553!* Now, it's worth noting Stock Advisor's total average return is 904% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of February 24, 2025 Geoffrey Seiler has positions in Alibaba Group. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy. Alibaba Shares Jump on AI Gains as Momentum Continues. Is It Too Late to Buy the Stock? was originally published by The Motley Fool
