Is BABA a good stock to buy? We came across a bullish thesis on Alibaba Group Holding Limited on Value & Momentum Portfolio’s Substack. In this article, we will summarize the bulls’ thesis on BABA. Alibaba Group Holding Limited’s share was trading at $115.38 as of June 10th. BABA’s trailing and forward P/E were 17.74 and 18.08 respectively according to Yahoo Finance.
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Alibaba Group (BABA) is a leading Chinese technology platform transitioning from a legacy e-commerce marketplace into a vertically integrated AI and cloud utility giant, as the “old Alibaba” retail model is replaced by an AI-first infrastructure platform embedded across commerce, logistics, and cloud computing.
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Alibaba operates an ecosystem including Taobao and Tmall for China e-commerce, Alibaba Cloud for AI and compute services, AIDC retail platforms such as AliExpress and Lazada, and Cainiao logistics, forming a full-stack digital economy. While China e-commerce under competitive pressure from Pinduoduo and ByteDance-led platforms, Alibaba’s cloud and AI segment is emerging as key re-rating driver, growing at 34–36% with rising enterprise adoption and pricing power from recent AI-compute price increases.
Proprietary Qwen large language model and T-Head chip development reinforce a structural cost advantage, while its 88VIP ecosystem of 59M+ high-value users strengthens retention and monetization. Despite near-term margin compression driven by heavy reinvestment into AI and quick commerce, free cash flow pressure is viewed as cyclical, supporting an investment trough thesis rather than structural deterioration.
Strategic optionality is supported by Alibaba’s 33% stake in Ant Group and a $19B buyback program through 2027, providing embedded support. Analyst consensus sits near $190, implying ~40% upside, while base-case targets a re-rating toward $185, ~35% upside as cloud margins expand from 9% toward 12% and AI monetization scales. With geopolitical macro headwinds priced in, Alibaba increasingly resembles an underappreciated AI utility platform with embedded optionality and catalysts for rerating over the next 12–24 months.
Previously, we covered a bullish thesis on Alibaba Group Holding Limited (BABA) by Kontra Investments in March 2025, highlighting TTG strength, AI cloud growth, and undervaluation on 13.5x forward P/E. BABA’s stock price has depreciated by approximately 14.62% since our coverage. Value & Momentum Portfolio remains bullish, focusing on AI transition with ~$185 upside driven by cloud margins.
Alibaba Group Holding Limited is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 102 hedge fund portfolios held BABA at the end of the first quarter which was 115 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.
Disclosure: None.
