Can Alibaba (BABA) Sustain Its Rally as E-Commerce Competition Intensifies?

Alibaba Group Holding Ltd. (NYSE:BABA) is among the most fantastic stocks every investor should pay attention to. On November 2, news portal South China Morning Post (SCMP) reported that Alibaba had announced a $281 million investment for a program to transition local convenience stores across China to Taobao-branded stores.

According to Hu Qiugen, the general manager of Alibaba’s instant commerce division, this program will utilize Alibaba’s digital infrastructure and technological expertise to upgrade these stores, enabling them to provide a “one-stop, 24-hour and 30-minute delivery” shopping service to consumers. These upgraded stores will then support the company’s businesses across instant commerce and on-demand delivery.

Can Alibaba (BABA) Sustain Its Rally as E-Commerce Competition Intensifies?

The competition in China’s instant commerce market has intensified recently. The SCMP report emphasizes that China’s instant commerce market is expected to reach 2 trillion yuan (~$280 billion). This data was based on estimates by the Chinese Academy of International Trade and Economic Cooperation, an institute under China’s Ministry of Commerce.

Another report from Bloomberg on November 7 highlighted that the competition between Alibaba Group Holding Ltd. (NYSE:BABA) and its competitor, Meituan, is being closely watched. The report states that some market participants, such as Julia Pan, an analyst with UOB Kay Hian Holdings Ltd. in Shanghai, have been benefiting from a pair trade strategy by being long on Alibaba and shorting Meituan. Pan states that “Alibaba’s advantage lies in its deep cash reserves, which allow it to sustain subsidies and flexibly adjust strategies.” Alibaba stock has rallied 90% while Meituan’s shares have declined 32% so far in 2025.

On the other hand, Xin-Yao Ng, a fund manager at Aberdeen Investments, holds a cautious stance on Alibaba, according to the same report. He believes that the company will need to continue investing aggressively to protect its market share. He argues:

“Alibaba has been losing e-commerce market share for a long time. The e-commerce profit drag will outweigh cloud growth for some time.”

Alibaba Group Holding Ltd. (NYSE:BABA) is a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology. Its platforms support merchants, brands, and consumers across China and international markets.

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. This article is originally published at Insider Monkey.