Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao and Tmall, which are digital retail platforms; Alimama, a proprietary monetization platform; 1688.com and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, Trendyol, and Daraz that are e-commerce platforms; Freshippo, a retail platform for groceries and fresh goods; and Tmall Global, an import e-commerce platform. The company also operates Cainiao Network logistic services platform; Ele.me, an on-demand delivery and local services platform; Koubei, a restaurant and local services guide platform; and Fliggy, an online travel platform. In addition, it offers pay-for-performance, in-feed, and display marketing services; and Taobao Ad Network and Exchange, a real-time online bidding marketing exchange. Further, the company provides elastic computing, storage, network, security, database, big data, and IoT services; and hardware, software license, software installation, and application development and maintenance services. Additionally, it operates Youku, an online video platform; Quark, a platform for information search, storage, and consumption; Alibaba Pictures and other content platforms that provide online videos, films, live events, news feeds, literature, music, and others; Amap, a mobile digital map, navigation, and real-time traffic information app; DingTalk, a business efficiency mobile app; and Tmall Genie smart speaker. The company was incorporated in 1999 and is based in Hangzhou, the People's Republic of China.

Alibaba looks like a large and financially stable business, but the current valuation already reflects part of the recovery potential. A P/E ratio around the industry median does not provide a clear signal of strong undervaluation, while P/S and P/FCF are noticeably above industry levels, which limits room for re-rating. P/B is slightly below the median, but this is offset by the fact that returns on capital and assets remain weaker than the industry: ROE, ROA, ROI, and return on tangible equity are below the benchmark and, in annual terms, have generally deteriorated compared with the stronger levels of the previous year. Operating margin has also declined, indicating pressure on business efficiency, even though gross margin remains around the industry norm. At the same time, net profit margin looks better than the industry, suggesting an ability to keep net profitability at an acceptable level, but the absolute TTM values of net income and operating income look weak relative to history. Debt burden, on the other hand, looks comfortable: debt/equity is significantly below the median, and long-term debt is low, which reduces financial risk. However, liquidity raises concerns: the current ratio is only slightly below the industry level, while the quick ratio is zero, which suggests weak coverage of short-term liabilities by highly liquid assets. Dividend yield of around 1% supports the investment case, but by itself it is not a strong enough driver for a higher valuation. The balance sheet remains large: assets and equity are growing, which is positive for long-term stability, but liabilities are also continuing to increase. Overall, the fundamentals are rather neutral to moderately negative for an upward revision of the target, because the balance sheet quality is good, but profitability, cash efficiency, and valuation multiples do not provide a convincing argument for a higher assessment. Therefore, a small conservative downward adjustment of the target is appropriate.

Alibaba Group Holding Limited

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Сильный индекс, значительно упал. Медведи в растерянности.

Strong index, significantly down. The bears are confused.

Сильный индекс, незначительно упал. Рынок не поддерживает быков.

Strong index, slightly down. The market does not support the bulls.

Сильный индекс, незначительно вырос. Рынок на стороне медведей.

Strong index, slightly up. The market is on the bears' side.

Средний индекс, значительно упал. Отток средств из лонгов резко увеличился и находится на высоком уровне.

Medium index, significantly down. The outflow of funds from longs has increased sharply and is at a high level.

Средний индекс, значительно вырос. Приток средств в шорты увеличился и находится на высоком уровне.

Medium index, significantly up. The inflow of funds into shorts has increased and is at a high level.

Alibaba has a strong balance sheet and low debt, but weak profitability, expensive P/S and P/FCF multiples, as well as deteriorating operating efficiency, limit the upside.

Key Points
Alibaba remains a dominant force in Chinese e-commerce and cloud infrastructure with a growing focus on artificial intelligence.
MercadoLibre is delivering hyper-growth in Latin America by integrating e-commerce, logistics, and a massive fintech ecosystem.
Which of these regional giants is the better fit for your growth-oriented portfolio in 2026?
As global markets shift, investors often weigh established tech giants against high-growth challengers. Deciding between Alibaba Group (NYSE:BABA) and MercadoLibre (NASDAQ:MELI) requires balancing mature scale and stability against aggressive regional expansion.
Alibaba is the undisputed heavyweight of Chinese online commerce and a major player in cloud computing. In contrast, MercadoLibre has built an indispensable digital ecosystem across Latin America. Both companies have moved beyond simple shopping to provide vital financial and logistical infrastructure for their respective regions.
The case for Alibaba
Alibaba operates a massive technology ecosystem focused on consumption and cloud services. Its core platforms, Taobao and Tmall, serve hundreds of millions of consumers in China, while international segments like AliExpress and Lazada extend its reach globally. The company is currently prioritizing its cloud and artificial intelligence divisions to capture the next wave of technological demand. No single customer accounts for more than 10% of total revenue, which suggests a well-diversified revenue base across its merchant and enterprise services.
In the fiscal year ended March 31, 2026, revenue reached nearly $152.2 billion. This represented a growth of roughly 2.7% compared with the prior fiscal year. The company reported net income of approximately $15.4 billion for the year, resulting in a net margin of close to 10.1%. While growth has moderated from its historical peaks, Alibaba continues to generate significant absolute profits from its established market position.
As of its March 2026 balance sheet, Alibaba maintains a strong financial foundation with a current ratio of roughly 1.3x. This ratio indicates the company has $1.30 in short-term assets for every dollar of short-term liabilities. Its debt-to-equity ratio is approximately 0.2x, indicating a conservative use of debt relative to shareholder equity. In the fiscal year ended March 31, 2026, the company reported free cash flow of negative $7.5 billion. Free cash flow represents the cash remaining after a company pays for its operations and capital expenditures.
The case for MercadoLibre
MercadoLibre is a dominant player among retail stocks in Latin America, where its ecosystem includes e-commerce, logistics, and the Mercado Pago fintech platform. The company serves over 131 million unique buyers, providing them with essential tools for digital payments and credit. While it acts as a platform for third-party sellers, MercadoLibre also engages in first-party sales to ensure competitive pricing in critical categories. It relies on a sprawling logistics network, Mercado Envios, and partnerships with financial institutions to facilitate regional trade.
In the fiscal year ended Dec. 31, 2025, revenue reached nearly $28.9 billion. This was an increase of approximately 39.1% year over year, highlighting the rapid adoption of digital services in its core markets. The company reported net income of close to $2.0 billion, indicating a net margin of roughly 6.9%. This rapid growth in revenue and expanding profitability underscores the company's success in scaling its fintech and logistics operations across Brazil, Mexico, and Argentina.
As of its Dec. 31, 2025 balance sheet, MercadoLibre's current ratio was approximately 1.2x, and its total debt (including lease obligations) was about 1.7 times shareholder equity -- meaning the company carried roughly $1.70 in debt for every dollar of equity. This reflects a fairly leveraged capital structure, though a significant share of that debt supports MercadoLibre's fast-growing lending business rather than core operations.
Risk profile comparison
Alibaba faces intense competition in the Chinese market from rival platforms using aggressive pricing strategies to capture market share. The company operates in a complex regulatory environment that carries risks of shifting government policies affecting business operations. Geopolitical tensions also influence investor sentiment and can impact the growth of its international e-commerce segments. Additionally, the transition toward AI and cloud services requires heavy ongoing investment to keep pace with global competitors.
MercadoLibre faces competition from local retailers and global giants like Amazon (NASDAQ:AMZN) that use low-price models. The company depends on infrastructure from Alphabet and Apple (NASDAQ:AAPL) for its cloud services and mobile app presence, which exposes it to potential operational disruptions. Macroeconomic volatility and currency fluctuations in Latin American markets remain constant challenges. Furthermore, its expanding credit business carries risks of higher default rates if economic conditions in the region deteriorate.
Valuation comparison
Investors are currently paying a higher P/S ratio and Forward P/E for MercadoLibre than for Alibaba, based on future earnings estimates.
Forward P/E
16.9x
54.1x
P/S ratio
1.7x
3.6x
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
I'd go with MercadoLibre, though the investment case requires some patience. Its most recent quarter crossed $10 billion in revenue for the first time, growing at the fastest pace in four years. Commerce and fintech are accelerating simultaneously across Brazil and Mexico, and the credit card business is expanding rapidly. That kind of top-line momentum is hard to find anywhere in the world right now.
But MercadoLibre is deliberately sacrificing short-term profitability to fund aggressive expansion. Free shipping subsidies, credit card customer acquisition, and logistics infrastructure are all weighing on margins. The stock dropped after earnings for that reason, and investors need to be comfortable with that trade-off.
Alibaba's quarter was messier still. Cloud revenue grew on AI demand, but earnings missed badly and free cash flow turned sharply negative. The geopolitical risk between the U.S. and China also adds uncertainty that is difficult to plan around.
Both stocks carry major trade-offs right now. But MercadoLibre is investing to dominate a region where e-commerce and fintech penetration is still in its early stages. For a long-term investor comfortable with near-term margin pressure, that is the more exciting opportunity.
Should you buy stock in Alibaba Group right now?
Before you buy stock in Alibaba Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks 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.
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Sara Appino has positions in Amazon, Apple, and MercadoLibre. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and MercadoLibre. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Alibaba vs. MercadoLibre: Which E-Commerce Giant Is a Better Buy in 2026?

Key Points
Alibaba maintains a dominant position in China through its massive e-commerce and cloud computing segments.
Coupang is rapidly scaling its vertically integrated logistics network across South Korea and Taiwan.
Which of these Asian retail giants is the better fit for your portfolio in 2026?
Choosing between the established scale of China or the high-growth efficiency of South Korea presents a unique challenge for investors. You must decide whether Alibaba Group (NYSE:BABA) or Coupang Inc (NYSE:CPNG) offers the better risk-adjusted path.
Alibaba provides the backbone for digital trade in China through its core marketplaces and cloud computing infrastructure. Coupang focuses on a vertically integrated delivery network that has revolutionized retail in South Korea. Both companies present significant opportunities, but their geographic focus and capital structures create markedly different investment profiles for 2026.
The case for Alibaba
Alibaba operates a sprawling ecosystem that includes massive e-commerce platforms such as AliExpress and Lazada, as well as a significant cloud computing business. The company focuses on leveraging artificial intelligence to enhance its marketing reach for merchants and brands globally. Since no single customer accounts for more than 10% of revenue, the business maintains a diversified client base among retail stocks and technology segments.
In the fiscal year ended March 31, 2026, revenue reached about $152.2 billion, representing a year-over-year increase of roughly 3%. The company reported a net income of approximately $15.4 billion during this period, which reflects a net margin of around 10%. While revenue grew compared with the prior fiscal year, the net margin contracted slightly from the 13.1% achieved in the year before. (Alibaba reports in Chinese renminbi. The amounts have been converted to U.S. dollars).
As of its March 2026 balance sheet, the debt-to-equity ratio is approximately 0.2x, which means total debt is small relative to shareholder equity. The current ratio of roughly 1.3x indicates that current assets exceed current liabilities. The company generated a free cash flow loss of nearly $7.5 billion, which is the cash remaining after subtracting capital expenditures from operating cash.
The case for Coupang
Coupang utilizes a membership-based loyalty model, known as WOW, to drive deep engagement among its close to 25 million active customers. The company manages an end-to-end fulfillment infrastructure that supports retail, restaurant delivery, and fintech services. Its recent acquisition of Farfetch has expanded its reach into the global luxury market, while commercial partnerships help distribute unique products across Asia.
In the fiscal year ended Dec. 31, 2025, revenue reached about $34.5 billion, representing roughly 14% year-over-year growth. The company posted a net income of approximately $208 million, resulting in a net margin of about 0.6%. This reflects an improvement in profitability compared with the prior fiscal year, although the net margin remains quite narrow as the company reinvests for growth.
As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 1.0x, meaning total debt is roughly equal to shareholder equity. The so-called current ratio of approximately 1.0x indicates that current assets just cover short-term liabilities, while free cash flow for the latest fiscal year reached nearly $522 million. Note that stock-based compensation accounted for roughly 27% of operating cash flow, inflating reported cash generation, since stock-based compensation is a non-cash expense added back in the cash flow statement.
Risk profile comparison
Alibaba faces significant uncertainty regarding the regulatory environment and broader economic conditions in its primary market. The company must navigate intense competition from other large consumer discretionary companies while managing the complexities of its international expansion. Additionally, the transition toward AI-driven services requires heavy ongoing investment, which may impact short-term net margin if growth does not materialize as expected.
Coupang is facing regulatory investigations in Korea over its search rankings and the bundling of membership services. A major 2025 data incident led to ongoing litigation and potential sanctions, while the integration of Farfetch continues to present operational challenges. The company also faces stiff competition from Amazon.com Inc (NASDAQ:AMZN) in various global territories, requiring continuous capital to maintain its logistics edge.
Valuation comparison
Coupang carries a much higher Forward P/E because investors expect faster growth, whereas Alibaba appears discounted when looking at its P/S ratio.
Forward P/E
18.1x
75.8x
P/S ratio
1.7x
0.8x
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
Alibaba focuses on defending its cash-rich China e-commerce marketplaces, Taobao and Tmall, while funneling capital into higher-growth AI cloud and AI services. Alibaba is the public cloud leader in China and the owner of the Qwen open- and closed-source models. Yet its retail businesses are losing market share to Chinese rivals, which crimps the business's ability to fund money-losing AI model efforts. That means its AI cloud and compute services are the one impressive growth center for the business. It grew 45% year over year in that sector. One metric in its favor is that the current valuation of Alibaba is attractive relative to U.S. cloud and AI peers.
Coupang is similarly a dominant retail platform in its primary market of Korea and it has made great inroads into Taiwan. But a fire at a distribution center and a data breach have made for a tough 2026 for Coupang, with an indication that some consumers who abandoned the platform have yet to return, creating a drag on results. Yet membership in its WOW program has recently reached all-time highs, suggesting the company could start to post improving results in the next few quarters.
Wall Street sees Coupang swinging to a net loss for fiscal 2026, but rebounding in 2027 to post much healthier net income and sales. Forward numbers tend to be speculative, but it's a good long-term sign.
Alibaba is forecast to continue growing, but we are skeptical of the company's ability to win in the hyper-competitive Chinese market and to expand its fast-growing AI services business beyond the China-dominated region.
Coupang's low P/S ratio gives some justification here of the business as a value play, especially for investors willing to hold longer term for the business to rebound later in the decade.
Should you buy stock in Alibaba Group right now?
Before you buy stock in Alibaba Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks 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 $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Alibaba Group and Coupang. The Motley Fool has a disclosure policy.

Alibaba vs. Coupang: Which Asia Retail Powerhouse Stock Is a Better Buy in 2026?

Key Points
Alibaba maintains a dominant position in Chinese e-commerce and cloud services with massive scale.
Shopify is a high-growth leader providing essential global commerce infrastructure for millions of merchants.
Which e-commerce giant offers the best balance of value and growth for your portfolio in 2026?
The global e-commerce landscape is shifting as mature giants face off against nimble infrastructure leaders. Investors must decide if Alibaba Group (NYSE:BABA) or Shopify Inc (NASDAQ:SHOP) offers a more compelling opportunity today.
Alibaba functions as a diversified technology conglomerate with deep roots in Chinese retail and cloud computing. Conversely, Shopify provides the essential software tools that empower independent merchants to build their own digital storefronts. While both benefit from the expansion of global retail stocks, they operate on vastly different financial models and valuations.
The case for Alibaba
Alibaba is a massive technology player centered on e-commerce, cloud computing, and logistics. It primarily serves brands and small businesses across China, Southeast Asia, and Türkiye through platforms such as Tmall and Lazada. Recent strategies focus on integrating AI in retail and its cloud offerings to drive merchant efficiency.
In the fiscal year ended March 31, 2026, revenue reached nearly $152.2 billion, representing a growth of approximately 3% compared with the prior fiscal year. The company reported net income of roughly $15.4 billion for that period. This resulted in a net margin of around 10%, as the company balanced heavy investments in logistics with its core marketplace profitability. (Results have been converted to U.S. dollars. Alibaba reports in Chinese renminbi).
On its March 2026 balance sheet, the company maintained a debt-to-equity ratio of approximately 0.2x. This ratio measures total debt relative to shareholders' equity, and a lower number generally indicates lower financial risk. The so-called current ratio, which compares short-term assets to short-term liabilities to measure liquidity, is roughly 1.3x. Free cash flow was negative at approximately $7.5 billion, and it equals cash flow from operations minus capital expenditures.
The case for Shopify
Shopify provides the underlying internet infrastructure for commerce, enabling millions of merchants across 175 countries to manage their sales channels. The company serves a wide range of clients, from individual entrepreneurs to large enterprise operations. No single merchant represents more than five percent of total revenues, which reduces customer concentration risk for the platform.
According to its latest annual report, in the fiscal year ended Dec. 31, 2025, revenue reached nearly $11.6 billion. This represented a year over year growth of approximately 30%. Net income for the period was roughly $1.2 billion, yielding a net margin of about 11% as the platform successfully scaled its various merchant services.
As of its December 2025 balance sheet, the company had a debt-to-equity ratio of zero and a current ratio of approximately 6x. Free cash flow reached just over $2 billion for the fiscal year ended Dec. 31, 2025. Note that stock-based compensation accounted for roughly 22% of operating cash flow, inflating reported cash generation because stock-based compensation is a non-cash expense added back in the cash flow statement.
Risk profile comparison
Alibaba faces risks from intense competition in the Chinese e-commerce market and evolving regulatory landscapes. The company must also navigate geopolitical tensions that could impact its international expansion and cloud business. Furthermore, soft consumer spending in key domestic markets remains a headwind for growth.
Shopify faces significant legal and reputational risks regarding data privacy and intellectual property enforcement, including litigation in California and Australia. The company relies on third-party providers like Stripe and PayPal Holdings Inc (NASDAQ:PYPL) for payment processing, meaning service disruptions could negatively impact operations. Competition remains intense from large technology platforms like Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META) that may limit merchant data access.
Valuation comparison
Alibaba appears much cheaper based on its Forward P/E, while Shopify commands a premium P/S ratio due to its growth.
Forward P/E
18.1x
59.5x
P/S ratio
1.7x
14.3x
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?
Shopify delivered an excellent quarterly report in August, ringing up third quarter fiscal 2026 of $3.58 billion, up 34% year over year. It's the business's third-ever quarter of more than $3 billion in revenue, a mark it first chalked up in 2025. It is interesting to note that the business is growing much faster than the retail industry it serves.
Shopify appears ready to benefit from the age of agentic AI merchandising, which is just getting off the ground. Shopify supports Google's UCP, designed to enable agentic AI commerce by allowing AI agents to interact with merchant systems throughout the shopping journey. That, along with other trends, has management projecting low-30% annual revenue growth for the current year. Long-term, management aims to expand in Europe to drive additional growth.
Alibaba, meanwhile, focuses on defending its cash-rich China e-commerce marketplaces, Taobao and Tmall, while funneling capital into higher-growth AI cloud and AI services. Alibaba is the public cloud leader in China and the owner of the Qwen open- and closed-source models. Yet its retail businesses are losing market share to Chinese rivals, which crimps the business's ability to fund money-losing AI model efforts. That means its AI cloud and compute services are the one impressive growth center for the business. It grew 45% year over year in that sector.
So which is the better buy? Alibaba operates in the hyper-competitive Chinese market and doesn't have much momentum to expand beyond the region. Shopify, meanwhile, is showing it is a valued provider of platform services to the retail industry, and while Europe isn't a fast-growing market, the ability to expand into the E.U. appears to be a better growth opportunity for the business than Alibaba's push into AI. Go with Shopify for the long-term.
Should you buy stock in Alibaba Group right now?
Before you buy stock in Alibaba Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks 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 $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of September 7, 2026.
Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Shopify. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Alibaba vs. Shopify: Which Retail Platform Is a Better Buy in 2026?

For Immediate Release
Chicago, IL – September 4, 2026 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Amazon.com, Inc. AMZN, AbbVie Inc. ABBV, Alibaba Group Holding Ltd. BABA and Lulu's Fashion Lounge Holdings, Inc. LVLU.
Here are highlights from Thursday’s Analyst Blog:
Top Analyst Reports for Amazon, AbbVie and Alibaba
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Amazon.com, Inc., AbbVie Inc. and Alibaba Group Holding Ltd., as well as a micro-cap stock Lulu's Fashion Lounge Holdings, Inc.. The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.
These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today's research reports here >>>
Ahead of Wall Street
The daily 'Ahead of Wall Street' article is a must-read for all investors who would like to be ready for that day's trading action. The article comes out before the market opens, attempting to make sense of that morning's economic releases and how they will affect that day's market action. You can read this article for free on our home page and can actually sign up there to get an email notification as this article comes out each morning.
You can read today's AWS here >>> Big Morning for News: Jobless Claims, Fed Speakers, Trade Deficit
Today's Featured Research Reports
Amazon's shares have outperformed the Zacks Internet - Commerce industry over the year-to-date period (+11.8% vs. +3.6%). The company's international expansion and diversification across e-commerce, AWS cloud services, advertising and streaming create multiple revenue streams while reducing concentration risk.
For 3Q'26, Amazon guided net sales of $197-$202 billion and operating income of $22.5-$26.5 billion. AI integration across operations enhances personalization, logistics and AWS offerings, strengthening competitive positioning. However, substantial capital expenditure requirements for AI infrastructure and data centers strain financial resources and compress margins, with trailing-12-month free cash outflow reported at $7.6 billion.
Amazon's expanding debt burden reduces financial flexibility amid rising interest rates. Intensifying competition from Walmart, Microsoft Azure, and Google Cloud is an overhang.
(You can read the full research report on Amazon here >>>)
Shares of AbbVie have gained +16.2% over the year-to-date period against the Zacks Large Cap Pharmaceuticals industry's gain of +17.6%. The company has successfully navigated Humira's loss of exclusivity (LOE) by launching two other successful immunology medicines, Skyrizi and Rinvoq, which are performing extremely well, bolstered by approvals in new indications, and should support top-line growth in the next few years.
AbbVie's neuroscience portfolio is also rapidly expanding and contributing significantly to top-line growth. AbbVie boasts a robust pipeline and expects important data readouts, regulatory submissions and approvals throughout the rest of 2026.
AbbVie has been on an acquisition spree in the past couple of years to bolster its early-stage pipeline that should drive long-term growth. However, the company faces several headwinds like Humira LOE impact, slowing oncology sales and continued macro headwinds for Aesthetics.
(You can read the full research report on AbbVie here >>>)
Alibaba's shares have underperformed the Zacks Internet - Commerce industry over the year-to-date period (-23.7% vs. +3.6%). The company's investment cycle remains costly. China commerce monetization slowed, quick commerce still requires sustained spending, and AI model development is consuming substantial resources. Elevated infrastructure outlays have pushed free cash flow deeper into negative territory despite higher operating cash flow.
Alibaba therefore offers credible long-term growth avenues in cloud, AI and commerce, but near-term returns remain constrained by investment intensity and uneven core-commerce trends, supporting a Neutral view.
Nevertheless, Alibaba retains a broad commerce ecosystem and is gaining traction from AI-led cloud demand, deeper integration across its consumer platforms and better operating discipline in international commerce. The new segment structure also aligns commerce, cloud infrastructure and AI applications more closely.
(You can read the full research report on Alibaba here >>>)
Shares of Lulu's Fashion have outperformed the Zacks Retail - Apparel and Shoes industry over the year-to-date period (+114.6% vs. -14.6%). This microcap company with a market capitalization of $32.10 million saw its first-half 2026 gross margin expanded 390 bps to 47%, while net loss narrowed to $5.6 million from $11 million as selling and marketing and G&A expenses declined 14% and 12%, respectively.
Assortment productivity is also improving, with revenue per new product launched rising 28% in casual apparel and 48% in footwear. Inventory declined 23%, helping operating cash flow increase to $7.5 million. Wholesale adds another growth avenue, with Q2 revenues nearly doubling and specialty partners rising to 26. Management also expects adjusted EBITDA to turn positive in 2026.
However, first-half revenues fell 14% as orders declined 16%, while elevated returns and limited revolver availability constrain flexibility. Nasdaq compliance also remains a risk, given the stockholders' equity deficit. The stock trades at just 0.11X EV/sales versus 1.63X for its sub-industry.
(You can read the full research report on Lulu's Fashion here >>>)
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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This article originally published on Zacks Investment Research (zacks.com).

The Zacks Analyst Blog Highlights Amazon.com, AbbVie, Alibaba and Lulu's Fashion Lounge

Thursday, September 3, 2026
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Amazon.com, Inc. (AMZN), AbbVie Inc. (ABBV) and Alibaba Group Holding Ltd. (BABA), as well as a micro-cap stock Lulu's Fashion Lounge Holdings, Inc. (LVLU). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.
These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Ahead of Wall Street
The daily 'Ahead of Wall Street' article is a must-read for all investors who would like to be ready for that day's trading action. The article comes out before the market opens, attempting to make sense of that morning's economic releases and how they will affect that day's market action. You can read this article for free on our home page and can actually sign up there to get an email notification as this article comes out each morning.
You can read today's AWS here >>> Big Morning for News: Jobless Claims, Fed Speakers, Trade Deficit
Today's Featured Research Reports
Amazon’s shares have outperformed the Zacks Internet - Commerce industry over the year-to-date period (+11.8% vs. +3.6%). The company’s international expansion and diversification across e-commerce, AWS cloud services, advertising and streaming create multiple revenue streams while reducing concentration risk.
For 3Q’26, Amazon guided net sales of $197-$202 billion and operating income of $22.5-$26.5 billion. AI integration across operations enhances personalization, logistics and AWS offerings, strengthening competitive positioning. However, substantial capital expenditure requirements for AI infrastructure and data centers strain financial resources and compress margins, with trailing-12-month free cash outflow reported at $7.6 billion.
Amazon’s expanding debt burden reduces financial flexibility amid rising interest rates. Intensifying competition from Walmart, Microsoft Azure, and Google Cloud is an overhang.
(You can read the full research report on Amazon here >>>)
Shares of AbbVie have gained +16.2% over the year-to-date period against the Zacks Large Cap Pharmaceuticals industry’s gain of +17.6%. The company has successfully navigated Humira's loss of exclusivity (LOE) by launching two other successful immunology medicines, Skyrizi and Rinvoq, which are performing extremely well, bolstered by approvals in new indications, and should support top-line growth in the next few years.
AbbVie’s neuroscience portfolio is also rapidly expanding and contributing significantly to top-line growth. AbbVie boasts a robust pipeline and expects important data readouts, regulatory submissions and approvals throughout the rest of 2026.
AbbVie has been on an acquisition spree in the past couple of years to bolster its early-stage pipeline that should drive long-term growth. However, the company faces several headwinds like Humira LOE impact, slowing oncology sales and continued macro headwinds for Aesthetics.
(You can read the full research report on AbbVie here >>>)
Alibaba’s shares have underperformed the Zacks Internet - Commerce industry over the year-to-date period (-23.7% vs. +3.6%). The company’s investment cycle remains costly. China commerce monetization slowed, quick commerce still requires sustained spending, and AI model development is consuming substantial resources. Elevated infrastructure outlays have pushed free cash flow deeper into negative territory despite higher operating cash flow.
Alibaba therefore offers credible long-term growth avenues in cloud, AI and commerce, but near-term returns remain constrained by investment intensity and uneven core-commerce trends, supporting a Neutral view.
Nevertheless, Alibaba retains a broad commerce ecosystem and is gaining traction from AI-led cloud demand, deeper integration across its consumer platforms and better operating discipline in international commerce. The new segment structure also aligns commerce, cloud infrastructure and AI applications more closely.
(You can read the full research report on Alibaba here >>>)
Shares of Lulu's Fashion have outperformed the Zacks Retail - Apparel and Shoes industry over the year-to-date period (+114.6% vs. -14.6%). This microcap company with a market capitalization of $32.10 million saw its first-half 2026 gross margin expanded 390 bps to 47%, while net loss narrowed to $5.6 million from $11 million as selling and marketing and G&A expenses declined 14% and 12%, respectively.
Assortment productivity is also improving, with revenue per new product launched rising 28% in casual apparel and 48% in footwear. Inventory declined 23%, helping operating cash flow increase to $7.5 million. Wholesale adds another growth avenue, with Q2 revenues nearly doubling and specialty partners rising to 26. Management also expects adjusted EBITDA to turn positive in 2026.
However, first-half revenues fell 14% as orders declined 16%, while elevated returns and limited revolver availability constrain flexibility. Nasdaq compliance also remains a risk, given the stockholders’ equity deficit. The stock trades at just 0.11X EV/sales versus 1.63X for its sub-industry.
(You can read the full research report on Lulu's Fashion here >>>)
Other noteworthy reports we are featuring today include Quanta Services, Inc. (PWR), Coherent Corp. (COHR) and CF Industries Holdings, Inc. (CF).
Mark Vickery
Senior Editor
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Surge in Online Orders & AWS Momentum Benefit Amazon (AMZN)
Alibaba (BABA) Gains From International Commerce Businesses
Featured Reports
Coherent (COHR) Gains From AI Boom Amid Concentration Risk
Per the Zacks analyst, Coherent capitalizes on AI datacenter build-out, bolstering strength in the Datacenter and Communications. However, high revenue concentration in this segment heightens risk.
CF Benefits from Strong Pricing Environment and Durable Demand
Per the Zacks analyst, higher prices across segments due to tighter supply of nitrogen as geopolitical risks limit availability and constructive global nitrogen demand boost future outlook.
Leisure Transient Demand & Rate Growth Aid Host Hotels (HST)
Per the Zacks analyst, Host Hotels gains from solid demand, group momentum, renovations and disciplined asset recycling. However, wage inflation and high interest expenses may pressure margin growth.
Revvity's (RVTY) Growth Outlook Faces Chinese Pressure and Margin Risk
As per the Zacks analyst, Revvity's growth outlook is supported by diagnostics and software momentum, but Chinese pressure and margin risks may weigh on near-term performance.
Strength in Network Infrastructure Unit Aids EnerSys (ENS)
Per the Zacks analyst, EnerSys' Network Infrastructure segment is driven by strength in data centers, communications and power electronics. Its shareholder-friendly measures are encouraging.
Investment Income Growth Aids Main Street (MAIN) Amid High Costs
Per the Zacks analyst, Main Street's rising investment income, driven by portfolio expansion and higher fee income, supports growth. Yet, elevated expenses may pressure profitability.
California Resources (CRC) to Benefit from Midstream Asset Expansion
The Zacks analyst believes that California Resources' expanding midstream assets can improve market access, but rising operating costs and capital requirements may limit free cash flow.
New Upgrades
Strong Public Spending & Acquisitions Benefit Quanta's (PWR) Growth
Per the Zacks analyst, Quanta is benefiting from robust public infrastructure spending trends and elevated demand for AI-related infrastructure, with acquisitions broadening capabilities.
Generac Rides on C&I Growth, Data Center Backlog and Expansion
Per the Zacks analyst, robust C&I growth, a sizable data center backlog and higher 2026 C&I sales expectations support Generac's outlook despite residential weakness.
e.l.f. Beauty's (ELF) Diverse Portfolio, Global Expansion Drive Growth
Per the Zacks analyst, e.l.f. Beauty's diverse portfolio and global expansion support growth across brands and markets. In the first quarter of fiscal 2027, net sales rose 36% to $479.4 million.
New Downgrades
Dull Macro Scenario Irks Bruker (BRKR) Amid Unfavorable FX
The Zacks analyst is concerned that Bruker Corporation's trade effects remain hard to model, while its global revenue base keeps growth and earnings sensitive to currency fluctuations.
Softer Cypto Market, Competition Weigh on Coinbase Global (COIN)
Per the Zacks analyst, Coinbase faces near-term pressure as softer crypto market activity weighs on transaction volumes. Evolving regulatory landscape and execution risks are concerns.
Housing Weakness & Pricing Risks Hurt Builders FirstSource (BLDR)
Per the Zacks analyst, residential weakness due to affordability pressures and high mortgage rates hurt Builders FirstSource. Also, pricing pressures and reduced operating leverage are added risks.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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This article originally published on Zacks Investment Research (zacks.com).

Top Analyst Reports for Amazon, AbbVie & Alibaba

Key Points
Alibaba looks cheap, but its earnings are falling sharply while AI and instant-commerce spending drain cash.
Cloud growth is promising, but it isn’t yet big enough to offset those costs.
For me, that makes BABA a risky turnaround story, not a once-in-a-decade bargain.
Alibaba (NYSE: BABA) closed below $115 on Aug. 31, putting it about 60% below its all-time closing high of $298.65 set in October 2020. The math on that drawdown may look like a gift. I do not think it is one, and here are three reasons why.
Reason No. 1: The earnings base is collapsing while revenue grows
This is the part that breaks the "cheap stock" framing. In the June quarter, Alibaba grew revenue 8.6% to RMB 268.95 billion. But net income excluding extra items fell 75.6% to RMB 10.54 billion from RMB 43.12 billion a year earlier. Basic earnings per share (EPS) dropped from RMB 18.57 to RMB 4.51.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Profit margins compressed from 14.8% to 7%. When you buy a stock 60% off its high, you are implicitly assuming that the earnings that justified the old price still exist. Here, they have been cut by three-quarters. Adjust the multiple for that, and the discount shrinks fast.
Reason No. 2: The AI build-out consumes cash rather than generating it
Capital expenditure hit RMB 67.7 billion in the quarter, up 75% year over year. Free cash flow swung to an outflow of RMB 44.67 billion. Alibaba has spent RMB 190 billion of an RMB 380 billion three-year plan, so it is halfway through, and the spending is not linear.
Management was candid about the trade-off. The CFO said that at current margins, keeping cloud growth below 33% would generate positive cash flow, but the company is choosing to make aggressive investments instead. Break-even on AI capex takes three years at current gross margins, potentially 2.5 years if margins improve.
The cloud business is genuinely good. External revenue grew 45%, a 22-quarter high, with EBITDA margin at 12% and AI product revenue at an RMB 49.5 billion annual run rate. But it is not yet large enough to offset the group drag. The stock fell about 9% the day these results landed, despite that acceleration.
Reason No. 3: The instant commerce war has no clean exit
In 2025, HSBC (NYSE: HSBC) estimated that Alibaba lost as much as RMB 87 billion in instant retail over 12 months. The company incurs roughly RMB 2 to 5 per order. It treats this as customer acquisition cost rather than operational failure, and maybe that framing is right. However, it means a second uncapped spending program running alongside the AI build-out, funded by the same balance sheet.
There is a bigger point here that bulls tend to skip. Alibaba is fighting an expensive, grinding war for a domestic market it already knows well, against a competitor that will not fold. Meituan cut its quarterly operating loss from RMB 16.1 billion to RMB 6.5 billion and still holds roughly 70% of orders with an average value above RMB 30, where the margin actually lives.
Meanwhile, the market that people imagine Alibaba eventually cracking is close. Amazon (NASDAQ: AMZN) holds roughly 37.6% to 40.5% of the United States e-commerce market, with Walmart (NASDAQ: WMT) a distant second near 6.4%. Add Shopify's (NASDAQ: SHOP) 14%, and those two platforms account for about half of all United States online spending. Alibaba does not register in that table. It never has, and the combination of logistics density, Prime lock-in, and political sensitivity around Chinese platforms means it never will, in my opinion.
What the setup actually is
Alibaba has lots of cash reserves and can absorb this. Cloud growth is accelerating, AI products carry higher gross margins than the rest of the portfolio, and management targets RMB 100 billion in external cloud revenue by 2030 at 20% gross margins.
That is a credible long-term story. It is not a once-in-a-decade setup. A once-in-a-decade setup is a healthy business priced for disaster. This is a business voluntarily suppressing its earnings on two fronts simultaneously, with no committed end date for either, while free cash flow is negative.
Should you buy stock in Alibaba Group right now?
Before you buy stock in Alibaba Group, consider this:
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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!*
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HSBC Holdings is an advertising partner of Motley Fool Money. Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Shopify, and Walmart. The Motley Fool recommends Alibaba Group and HSBC Holdings. The Motley Fool has a disclosure policy.

Alibaba Is Down 60% From Its All-Time High. Is This the Once-in-a-Decade Setup That Patient Investors Wait For?

Key Points
As AI continues to proliferate, data centers are getting larger to achieve greater efficiency.
Some of them are becoming so big, in fact, that they are their own digital, physical, and logistical ecosystem.
Even without knowing precisely what a hyperscale data center is, knowing who offers cloud-based access to them -- and what their platforms are capable of -- puts things in their proper perspective.
Hyperscalers. It's a term we've all heard tossed around quite a bit lately -- and maybe even used ourselves -- perhaps without even knowing exactly what it means.
If that's you, I've got good news for you. That is, there's no hard-and-fast textbook definition of the word. There is an unofficial understanding of what it means, though.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
To fully appreciate what a hyperscaler is, however, you should also know which companies are the biggest names in the hyperscaling business. If you are interested in investing in hyperscalers, keep the information below in mind as you research your options.
Hyperscalers are data centers on steroids
Getting straight to the point, hyperscalers are just organizations that own and operate massive data centers.
There's no specific threshold for computing capacity, power consumption, or the number of processing chips that qualifies a data center as hyperscale. Both Cisco Systems and IBM agree that a true hyperscale facility is at least 10,000 square feet and houses a minimum of 5,000 servers (although most are far greater in scale and scope). And, each of these servers can accommodate anywhere from one to several dozen actual computing processors.
As for power, at the lower end of the scale, a smaller hyperscale data center may only need a few megawatts of electricity, although many require in the ballpark of 100 megawatts. A handful of the largest hyperscale facilities can draw several hundred megawatts of electricity, enough to power a few hundred thousand homes.
Most of the data centers that have been recently constructed or are currently being planned are, of course, artificial intelligence data centers, built using higher-performance technology that can handle significantly more digital data than the previous generation of data centers. As of its latest count, Data Center Map say there are over 12,000 data centers peppered all across the planet, with nearly 4,800 of those located in the United States alone.
Not all of those are hyperscale data centers or, for that matter, artificial intelligence data centers. Numbers from Synergy Research Group indicate that only about 1,360 data centers were up and running as of the end of 2025 and would qualify as hyperscale facilities. Although Synergy's data didn't say as much, I think it's reasonably safe to presume the majority of these hyperscale data centers are at least AI-capable, handling anywhere from a few petabytes to a few hundred petabytes of digital data every day.
For reference, a petabyte is 1 million gigabytes.
The usual hyperscale suspects
As I noted, knowing the companies that are leading the hyperscaler race may be even more helpful than understanding what a hyperscale facility technically is.
To this end, none of the big names in the business is particularly surprising. Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google are the industry's three biggest players, collectively controlling 63% of the public cloud market. That just means they offer remote, cloud-based access to their data center infrastructure to companies that don't want to (or can't) build their own. And again, much of this cloud computing infrastructure -- and certainly most of the more recently constructed facilities -- is hyperscaled infrastructure capable of artificial intelligence work.
It's not just Amazon, Microsoft, or Google, though. Meta Platforms (NASDAQ: META) and Oracle (NYSE: ORCL) are in the mix as well. While they may own fewer total hyperscale data centers, the ones they operate are, on average, similar in size to those managed by the big three names in the business. In fact, Meta's $50 billion, 10-million-square-foot "Hyperion" facility, currently under construction in Louisiana, will be one of the world's largest artificial intelligence data centers once it's completed.
Apple (NASDAQ: AAPL) is another hyperscaler name. Although it has fewer total AI data centers, just because it doesn't run a public cloud computing business, the few facilities it owns for its own internal use are massive.
Don't forget to look overseas as well. Like Apple and Oracle, China's technology powerhouses Alibaba (NYSE: BABA) and Baidu (NASDAQ: BIDU) don't have many high-performance data centers. Several of the ones they do have, however, are enormously capable simply because they're enormous. For instance, an AI data center being built by China Telecom in southern China will employ 10,000 "Zhenwu" processing chips designed and made by Alibaba for the express purpose of doing artificial intelligence work. This facility will most definitely qualify as a hyperscale data center.
That being said, I still contend that Amazon, Alphabet's Google, and Microsoft will remain the leading names in the artificial intelligence data center market, with Google eventually eclipsing Amazon's leading market share due to the strong performance of its proprietary Tensor Processing Units, or TPUs.
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James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Baidu, Cisco Systems, International Business Machines, Meta Platforms, Microsoft, and Oracle. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

What Are Hyperscalers? The 3 Cloud Giants Powering AI's Next Decade

Key Points
The results of Alibaba's AI investments are finally showing up in Alibaba's revenue numbers.
Pursuing the AI opportunity comes with a huge price tag.
If AI and cloud become large, profitable growth engines, Alibaba could soon look very different from the e-commerce company investors know today.
For years, investors knew the company primarily as China's e-commerce giant, with Taobao and Tmall at the center of its business. But Alibaba is now pouring billions of dollars into artificial intelligence (AI), building cloud infrastructure, developing its own AI models, and even investing in AI chips.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The transformation is starting to show up in the numbers.
In its fiscal 2027 first quarter, which ended June 30, Alibaba's AI cloud and compute services revenue jumped 45% year over year to 48.4 billion yuan (about $7.2 billion). But there's a catch: Capital spending surged 75% to 67.7 billion yuan ($10.1 billion), pushing free cash flow into negative territory.
So, is Alibaba a buy now? Investors should focus on one major green flag and one red flag.
Green flag: AI is becoming a real business
For years, Alibaba's AI ambitions were mostly a promise.
The company had Qwen, its family of large language models. It had Alibaba Cloud. And it had ambitious plans to invest heavily in AI infrastructure. But investors still needed proof that businesses would actually pay for these services.
That proof is beginning to emerge. Alibaba's AI cloud and compute services revenue grew 45% year over year in the latest quarter. That's impressive growth for a business already generating billions of dollars in quarterly revenue. Even more encouraging, adjusted earnings before interest, taxes, and amortization (EBITA) for the segment jumped 133%.
In simple terms, Alibaba isn't just getting more customers to use its AI services. It's also starting to make more money from the AI business as it grows.
That's important because cloud computing can become more profitable as infrastructure gets used more efficiently. Once the expensive data centers and computing systems are in place, additional revenue can flow through at higher margins -- an effect enabled by operating leverage.
Alibaba is also building an ecosystem around Qwen, its AI model family. Developers can use Qwen to build their own applications, while Alibaba provides the computing power and software tools needed to run them.
Think of it this way: Qwen attracts developers. Alibaba AI Cloud provides the infrastructure. If that flywheel continues to work, Alibaba could build a much larger and more valuable cloud business over time.
And there are already signs that this is happening. Alibaba said AI-related product revenue has grown at triple-digit percentage rates for 12 consecutive quarters, while Alibaba Cloud ranked first in China's AI cloud market, with a 38.1% market share.
For investors, this is the most encouraging part of Alibaba's transformation. AI is no longer just an investment story. It's starting to become a profit story.
Red flag: The AI opportunity doesn't come cheap
Here's the problem.
Alibaba is spending an enormous amount of money in pursuit of the AI opportunity.
Capital expenditures jumped 75% year over year to 68 billion yuan ($10.1 billion) in the latest quarter, and free cash flow turned negative. In other words, Alibaba is spending heavily today in the hope of generating much larger returns tomorrow.
While the conglomerate has historically relied on profits from its flagship e-commerce business to fund these investments, it may eventually turn to external funds for two reasons.
First, the e-commerce business itself is burning huge amounts of profits to expand into the instant commerce segment. While there are signs that this investment period is nearing its end, as evidenced by the recovery in its EBITA, there is no guarantee that Alibaba won't ramp it back up in the future.
Second, Alibaba has committed to spending approximately 380 billion yuan on AI and cloud infrastructure through 2029. So, while its capital expenditures have been high recently, they could grow further in the coming quarters.
In fact, Alibaba just announced a new share placement worth 80 billion yuan, saying that it would invest the money from that stock sale in AI. This suggests that more such secondary stock sales could take place in the future.
That creates important questions for investors: Will the returns from its AI businesses justify the billions Alibaba is spending to build them? And how much more equity dilution will take place along the way?
What does it mean for investors?
Alibaba's latest quarterly results paint a picture that features a fascinating combination of promise and risk for investors.
The green flag is increasingly clear: AI is driving rapid growth in Alibaba Cloud, and the business is beginning to show operating leverage. The red flag is equally clear: Capturing that growth requires enormous investments, which put pressure on cash flow and lead to equity dilution.
That's why the company is at a critical juncture. If Alibaba can turn today's 45% AI-cloud growth into a large, recurring, and profitable business, today's spending could look like a bargain in hindsight. If it can't, investors could discover that building an AI empire is much easier than earning an attractive return from it.
The former premise may make its stock a great buy today, while the latter raises important question marks. Investors should weigh both the upside and the downside before making a decision about buying Alibaba stock.
Should you buy stock in Alibaba Group right now?
Before you buy stock in Alibaba Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks 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 $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of August 29, 2026.
Lawrence Nga has positions in Alibaba Group. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Thinking of Buying Alibaba Stock Now? Here's 1 Green Flag and 1 Red Flag.

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Alibaba (BABA) Q1 2027 Earnings Call Transcript

(RTTNews) - Alibaba (BABA) has launched the international edition of QwenWork, its all-in-one workplace AI agent platform, expanding the service to users and enterprises across global markets.
QwenWork International entered public beta Wednesday through its website and desktop client, with an initial focus on fast-growing markets in Asia, the Middle East and Latin America. The platform currently supports English and simplified Chinese, with additional languages planned.
The service combines capabilities from Alibaba's QoderWork, MuleRun and Wukong AI agents, allowing users to issue natural-language instructions for tasks involving websites, computers and complex multistep workflows.
The desktop version also features an optional "Awareness" function that carries users' preferences and previous context across sessions. Users can save successful workflows as reusable skills.
QwenWork also offers web development, including hosting, databases and custom domains, alongside image, video and audio generation. Other capabilities include document creation, deep research, voice input, file analysis, scheduling, browser automation and authorized local file operations.
Alibaba said QwenWork International will use a subscription and credit-based model, with separate individual and enterprise plans and Basic and Advanced model tiers.
The company plans to expand integrations with international productivity tools and broaden the platform's workplace applications.

Alibaba Group Holding Limited

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