Alibaba Group Holding Limited (BABA): A Bull Case Theory 

We came across a bullish thesis on Alibaba Group Holding Limited on Valueinvestorsclub.com by miser861. In this article, we will summarize the bulls’ thesis on BABA. Alibaba Group Holding Limited’s share was trading at $162.21 as of September 16th. BABA’s trailing and forward P/E were 18.74 and 22.03 respectively according to Yahoo Finance.

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Alibaba Group (BABA) presents a compelling reward-to-risk opportunity at $120/ADS, driven primarily by its core e-commerce platform, Taobao-Tmall Group (TTG), and its cloud business, Alicloud. BABA’s current market price reflects a sum-of-the-parts (SOTP) discount, with TTG and Alicloud undervalued despite their strong growth trajectories. TTG, China’s largest e-commerce platform with ~40% GMV market share, has stabilized its market share after years of loss and is positioned for mid-single-digit GMV growth, supported by improvements in UI/UX, Prime membership, and targeted AI-driven advertising.

Take rates are expanding via technology fees and GenAI tools that automate marketing campaigns, creating sustainable margin expansion. Near-term margin pressure from the same-day delivery “war” with JD and Meituan is expected to abate within months, while macro tailwinds from metro-centric consumer recovery and government support for high-end domestic brands enhance TTG’s growth prospects. Alicloud is accelerating rapidly, with revenue growth rising from +3% in 2024 to +18% in early 2025, underpinned by expansion in public cloud adoption, AI/GenAI services, and a deep, vertically integrated cloud platform. Its Qwen-based AI offerings, including Model Studio, provide scalable PaaS and SaaS solutions for SMEs and large enterprises, while Alicloud’s infrastructure supports verticals such as autonomous vehicles and next-gen industrial applications.

High recurring revenue, operating leverage, and first-mover advantages in Chinese AI and cloud markets position Alicloud to double its revenue by 2028, with pretax margins expanding into the mid-teens.With management improving under CEO Eddie Wu, aggressive share buybacks, and continued dividends, BABA is well-positioned to unlock SOTP value. Over three years, the stock could reach ~$300/ADS, driven by TTG’s GMV and margin expansion and Alicloud’s cloud flywheel. Catalysts include sustained Alicloud growth, normalization of TTG margins, and a broader Chinese consumer recovery, making BABA an attractive investment with substantial upside and limited downside risk.

Previously we covered a bullish thesis on Alibaba Group Holding Limited (BABA) by Kontra Investments in March 2025, which highlighted TTG’s e-commerce growth, Cloud Intelligence momentum, AI adoption, and resilient profitability. The company’s stock price has appreciated approximately by 20% since our coverage due to near-term strength in AI and cloud adoption. miser861 shares a similar view but emphasizes SOTP undervaluation, Alicloud’s accelerating growth, and management-led operational improvements.

Alibaba Group Holding Limited is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 101 hedge fund portfolios held BABA at the end of the second quarter which was 125 in the previous quarter. While we acknowledge the risk and potential of BABA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BABA and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.