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 Group Holding Limited

Alibaba BABA is betting big on capital efficiency with its proposal to spin off Banma Network Technology and list it independently in Hong Kong. The move shifts funding for Banma’s fast-scaling auto-software business to public markets, reducing the company’s direct cash burden while preserving upside through a minority stake. Under the plan, Alibaba’s holding will drop from about 44.72% to just over 30%, subject to regulatory approvals, including the CSRC.
The spin-off addresses a key financial priority, redeploying capital toward higher-return areas like cloud, AI and share buybacks. Alibaba reported a robust net cash position of RMB 366.4 billion as of March 31, and generated RMB 73.9 billion in free cash flow in fiscal 2025, while returning nearly $16.5 billion to its shareholders through repurchases and dividends. Freeing itself from Banma’s funding needs ensures that capital can be allocated to this core growth and return initiatives.
This spin-off appears to be a win-win deal for both companies. It unlocks greater valuation potential for Banma as an independent mobility software leader while allowing Alibaba to streamline operations and focus on core businesses.
The spin-off’s success will largely depend on execution, navigating regulatory hurdles, securing an attractive IPO price and converting OEM alliances into consistent revenue growth. Should these efforts succeed, Alibaba could boost capital returns, concentrate on high-growth core operations and unlock significant shareholder value by turning Banma into a tradable asset.
Alibaba Faces Intensifying Cloud Competition
Amazon’s AMZN-owned Amazon Web Services (AWS) leads the global cloud market, especially in North America and Europe, while Alibaba Cloud dominates Asia-Pacific, particularly China and is expanding globally. Amazon’s AWS is known for its mature, feature-rich services, covering compute, storage, databases, networking and analytics. Although Amazon’s pricing is generally higher, it offers flexible models suited for diverse workloads. Amazon’s extensive capabilities and global reach make it a formidable competitor for Alibaba Cloud.
Alphabet GOOGL-owned Google Cloud Platform offers extensive global reach and seamless integration with the Google ecosystem. Google Cloud is highly regarded for its AI and ML strengths, including tools like Vertex AI and TensorFlow. While Alibaba Cloud provides AI services tailored for practical business applications such as recommendation engines and customer service bots, Google Cloud’s superior data storage, management, and advanced AI capabilities give it a competitive edge. Google Cloud continues to expand its influence worldwide.
BABA’s Share Price Performance, Valuation & Estimates
BABA shares have gained 40.9% in the year-to-date period, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 11.6% and 8.6%, respectively.
BABA’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, BABA stock is currently trading at a forward 12-month Price/Earnings ratio of 12.75X compared with the industry’s 25.17X. BABA has a Value Score of C.
BABA’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for first-quarter fiscal 2026 earnings is pegged at $2.13 per share, which remains unchanged over the past 30 days, indicating a 5.75% year-over-year decline.
Image Source: Zacks Investment Research
Alibaba currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See our %%CTA_TEXT%% report – free today!
7 Best Stocks for the Next 30 Days
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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alibaba Aims for Capital Efficiency: Can the Banma Spin-Off Succeed?

Alibaba Group's BABA aggressive AI strategy is rapidly becoming an expensive gamble that threatens to destroy shareholder value rather than create it.
Despite appearing cheap on traditional metrics, Alibaba represents a classic value trap where superficial attractiveness masks deeper structural problems. Alibaba continues to trade at a premium valuation with a Value Score of C. The market has priced in AI upside while underestimating execution risks and capital intensity required for meaningful transformation.
While management trumpets AI as the company's salvation, the underlying fundamentals reveal a deteriorating business model facing relentless competitive pressure and unsustainable capital requirements that make BABA a clear sell for 2025.
Alibaba Group Holding Limited Price and Consensus
Margin Compression Accelerates Despite AI Hype
The most alarming development for Alibaba investors is the accelerating margin deterioration masked by AI revenue growth narratives. Mizuho expects Alibaba to experience meaningful margin contraction in the second quarter, with competitive pressure affecting margins continuing through the second half of 2025 and into 2026. The investment bank has slashed its June 2025 quarter EBITDA forecast from 55 billion RMB to 45 billion RMB, representing an 18% reduction that signals serious profitability concerns.
More troubling is the company's cash flow destruction. Free cash flow plummeted 76% to RMB3,743 million compared to RMB15,361 million in the same quarter of 2024, mainly attributed to increased cloud infrastructure expenditure. This dramatic deterioration exposes the hidden cost of Alibaba's AI ambitions - massive capital expenditures that are hollowing out the company's financial strength while delivering questionable returns.
The cloud business, supposedly Alibaba's crown jewel, requires enormous ongoing investment just to remain competitive. Despite triple-digit AI product revenue growth for six consecutive quarters, these gains come at an unsustainable cost structure that suggests the business model is fundamentally flawed rather than temporarily challenged.
Competitive Annihilation From Multiple Fronts
Alibaba faces an unprecedented competitive assault that threatens its core market position. Competition in China's e-commerce and cloud markets continues to intensify. Domestic rivals like PDD Holdings PDD and ByteDance's Douyin maintain pressure on e-commerce operations, while international cloud providers like Microsoft MSFT and Amazon AMZN compete for enterprise customers. With the stock declining 7.9% over the past six months while underperforming the Zacks Internet-Commerce industry and the Zacks Retail-Wholesale sector, investors are paying elevated prices for a deteriorating business.
BABA Underperforms Peers & Sector in 6 Months
Image Source: Zacks Investment Research
PDD Holdings reported 94% year-over-year rise compared to Alibaba's 9% growth in the same quarter, demonstrating how quickly market dynamics can shift against established players. The emergence of social commerce and live-streaming sales channels represents an existential threat to Alibaba's traditional marketplace model, requiring massive investment in areas where the company lacks competitive advantages.
Douyin increased gross merchandise volume (GMV) by 46% year over year between August 2023 and July 2024, while Alibaba's flagship marketplaces Taobao and Tmall posted only 5% GMV growth. This stark performance gap illustrates how rapidly Alibaba is losing market share to more agile competitors. Douyin is integrating its supermarket and hourly delivery services, heating up competition in China's instant commerce sector against Alibaba. This forces Alibaba into expensive defensive battles across multiple fronts while competitors focus resources on specific market segments.
Regulatory and Earnings Deterioration
The regulatory environment continues deteriorating with new e-commerce rules requiring platforms to reduce merchant fees, directly pressuring Alibaba's already-strained margins. The Zacks Consensus Estimate for fiscal 2026 earnings indicates a decline of 4.77% year-over-year to $8.58 per share. The market appears to be pessimistic about Alibaba's growth trajectory. This continued earnings contraction occurs despite modest revenue growth, highlighting operational inefficiencies and competitive pressure.
Image Source: Zacks Investment Research
The company's strategic AI pivot requires patience and capital that rational investors should be unwilling to provide, given superior alternatives available in both technology and e-commerce sectors. Alibaba's transformation story may eventually succeed, but the execution risks, competitive threats, and capital intensity make it an unsuitable investment for 2025.
Conclusion
Investors seeking growth should look elsewhere rather than hoping Alibaba can successfully navigate its mounting challenges while simultaneously funding an expensive AI transformation. The risk-reward profile simply doesn't justify maintaining exposure to this deteriorating situation. BABA stock currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See our %%CTA_TEXT%% report – free today!
7 Best Stocks for the Next 30 Days
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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alibaba Doubles Down on AI Margins: Time to Hold or Cut Your Losses?

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the Global X Artificial Intelligence & Technology ETF (Symbol: AIQ), we found that the implied analyst target price for the ETF based upon its underlying holdings is $49.89 per unit.
With AIQ trading at a recent price near $45.23 per unit, that means that analysts see 10.30% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of AIQ's underlying holdings with notable upside to their analyst target prices are WeRide Inc (Symbol: WRD), PONY AI INC (Symbol: PONY), and Alibaba Group Holding Ltd (Symbol: BABA). Although WRD has traded at a recent price of $9.65/share, the average analyst target is 68.39% higher at $16.25/share. Similarly, PONY has 43.56% upside from the recent share price of $15.15 if the average analyst target price of $21.75/share is reached, and analysts on average are expecting BABA to reach a target price of $157.91/share, which is 29.14% above the recent price of $122.28. Below is a twelve month price history chart comparing the stock performance of WRD, PONY, and BABA:
Below is a summary table of the current analyst target prices discussed above:
Name
Symbol
Recent Price
Avg. Analyst 12-Mo. Target
% Upside to Target
Global X Artificial Intelligence & Technology ETF
AIQ
$45.23
$49.89
10.30%
WeRide Inc
WRD
$9.65
$16.25
68.39%
PONY AI INC
PONY
$15.15
$21.75
43.56%
Alibaba Group Holding Ltd
BABA
$122.28
$157.91
29.14%
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Analysts Anticipate 10% Upside For AIQ

Key Points
Alibaba's stock is outperforming Amazon's this year, but Amazon's revenue and earnings growth are stronger.
Both Amazon and Alibaba should have strong growth prospects.
Alibaba is the clear winner when it comes to valuation.
When a company is compared to Amazon (NASDAQ: AMZN), it's usually a compliment. I suspect, therefore, that the executives running Alibaba Group Holding (NYSE: BABA) don't mind it too much when their company is called the "Amazon of China."
Amazon's and Alibaba's businesses are remarkably similar. Both operate e-commerce platforms that dominate their target markets. Both are leading cloud service providers and have invested heavily in artificial intelligence (AI). Each of the two companies has expanded into digital entertainment and healthcare as well.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
The comparisons don't hold up as well when it comes to stock performance, though. Amazon has delivered a jaw-dropping return of over 226,000% since its initial public offering (IPO) in 1997. Since Alibaba's IPO in 2014, its stock has risen by only around 30%.
But which of these two growth stocks is the better pick right now? Here's how Amazon and Alibaba stack up against each other.
Current growth
While Amazon's stock performance has trounced Alibaba's over the long term, it's a different story more recently. So far in 2025, Alibaba's American depositary receipts have soared close to 50% while Amazon is barely in positive territory.
However, Amazon is growing faster than Alibaba in at least one way. In the second quarter of 2025, Amazon's net sales jumped 13% year over year. Alibaba's revenue in its latest reported quarter increased by 7% year over year.
It was a similar story on the two companies' bottom lines. Amazon's net income soared 35% year over year, while Alibaba's adjusted earnings grew by 22%. Granted, Alibaba's earnings based on generally accepted accounting principles (GAAP) skyrocketed by 13 times. However, this increase was primarily due to mark-to-market changes from its equity investments.
Growth prospects
The more important question is how much Amazon and Alibaba will continue to grow in the future. What is Wall Street's take? The consensus revenue growth estimate for Amazon next year is nearly 10%, compared to 8.3% for Alibaba, according to LSEG.
But analysts are more optimistic about Alibaba's earnings growth. The average estimate of the 29 analysts surveyed by LSEG is for the Chinese company to increase its earnings per share by roughly 20% next year. The average estimate of the 61 analysts surveyed by LSEG that cover Amazon is for the e-commerce and cloud services giant to grow its EPS by around 14.8%.
Looking beyond one year is more difficult. Both Amazon and Alibaba should have strong AI tailwinds that help their cloud businesses. However, both companies also face intense competition from rivals with deep pockets. Probably the biggest wild card is how the Chinese government's actions might impact Alibaba's growth.
Valuation
There's not much of a contest between these two growth stocks when it comes to valuation. Alibaba wins hands down.
Amazon's shares trade at a lofty forward price-to-earnings ratio of 33.4. Alibaba's forward earnings multiple is only 14.3. The Chinese tech giant also looks more attractive than Amazon in valuation metrics based on sales and book value.
What if growth is factored into the equation? Alibaba still comes out on top. Its price-to-earnings-to-growth (PEG) ratio based on analysts' five-year earnings growth projections is 1.28, versus 2.57 for Amazon.
Better growth stock?
Which is the better growth stock -- Amazon or Alibaba? I have a nuanced answer.
If you're a more risk-averse investor, Amazon is probably the better pick. The company doesn't face the uncertainty related to potential Chinese government interference that Alibaba does.
On the other hand, if your investing style is more aggressive, I think Alibaba is the better growth stock for you. Its growth drivers are similar to Amazon's, but its valuation is much more appealing. I like Amazon's prospects, but I suspect Alibaba has even more room to run over the next decade.
Should you invest $1,000 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 $649,544!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,113,059!*
Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of August 13, 2025
Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Better Growth Stock to Buy Right Now: Amazon or Alibaba?

In the latest close session, Alibaba (BABA) was down 1.43% at $118.64. The stock's change was less than the S&P 500's daily loss of 0.25%. At the same time, the Dow lost 0.45%, and the tech-heavy Nasdaq lost 0.3%.
Heading into today, shares of the online retailer had gained 12.78% over the past month, outpacing the Retail-Wholesale sector's gain of 2.27% and the S&P 500's gain of 2.71%.
Investors will be eagerly watching for the performance of Alibaba in its upcoming earnings disclosure. The company's earnings per share (EPS) are projected to be $2.13, reflecting a 5.75% decrease from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $34.26 billion, up 2.37% from the year-ago period.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $8.58 per share and a revenue of $141.93 billion, representing changes of -4.77% and +2.75%, respectively, from the prior year.
Investors should also take note of any recent adjustments to analyst estimates for Alibaba. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 11.85% lower within the past month. At present, Alibaba boasts a Zacks Rank of #5 (Strong Sell).
With respect to valuation, Alibaba is currently being traded at a Forward P/E ratio of 14.04. This expresses a discount compared to the average Forward P/E of 18.58 of its industry.
We can additionally observe that BABA currently boasts a PEG ratio of 1.62. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Commerce industry currently had an average PEG ratio of 1.5 as of yesterday's close.
The Internet - Commerce industry is part of the Retail-Wholesale sector. With its current Zacks Industry Rank of 170, this industry ranks in the bottom 32% of all industries, numbering over 250.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners Up
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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alibaba (BABA) Dips More Than Broader Market: What You Should Know

Alibaba Group BABA and Microsoft MSFT represent two divergent paths in the global cloud and AI race. While Microsoft dominates Western enterprise computing through Azure and its OpenAI partnership, Alibaba maintains leadership in China's cloud market despite mounting challenges. Both companies have made massive AI commitments that will define their trajectories for years to come. Recent data from Synergy shows Microsoft achieved a 20% share of the global cloud market in second-quarter 2025, while Alibaba won 4% share.
The timing for this comparison is critical as generative AI transforms cloud computing economics. Microsoft recently became the second company to surpass $4 trillion in market value following explosive Azure growth, while Alibaba announced a historic $53 billion infrastructure investment even as its stock languishes near decade lows.
Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for BABA Stock
Alibaba's ambitious $53 billion cloud and AI infrastructure commitment over three years exceeds its entire past decade of spending, signaling management's recognition that survival depends on AI competitiveness. The company's cloud segment showed tentative recovery with revenues excluding consolidated subsidiaries growing 17% year over year in the fiscal fourth quarter, while AI-related products maintained triple-digit growth for five consecutive quarters. Recent launches, including Qwen-Max, QwQ-Plus reasoning model, and QVQ-Max visual processing, demonstrate technical capabilities, with management claiming performance matching Western rivals.
However, these positives cannot mask deepening structural problems. Cloud growth remains sluggish compared to global peers, with public cloud revenues achieving only modest double-digit expansion while Microsoft's Azure rockets at 39%. The pivot toward high-quality revenues disguises market share losses and monetization failures. More troublingly, Alibaba canceled its cloud unit IPO, citing U.S. chip restrictions, exposing critical vulnerability to escalating technology sanctions that could cripple AI ambitions.
The company's financial deterioration accelerates despite heavy investment. Free cash flow collapsed 70% year over year due to infrastructure spending and merchant refunds, while adjusted EBITDA declined 5% even as revenues grew. Core e-commerce faces margin compression with customer management revenues crawling at 1% growth. Chinese regulatory uncertainty persists as authorities maintain unpredictable intervention patterns. Alibaba confronts a combination of geopolitical hostility, competitive displacement, and strategic confusion that renders its AI investments potentially worthless.
The Zacks Consensus Estimate for fiscal 2026 earnings indicates a downward revision of 10.9% over the past 30 days to $8.58 per share. The market appears to be pessimistic about Alibaba's growth trajectory.
Alibaba Group Holding Limited Price and Consensus
The Case for MSFT Stock
Microsoft's unprecedented AI momentum validates its position as the definitive platform for enterprise transformation. Azure's remarkable 39% growth, reaching $75 billion annual revenues in the fiscal fourth quarter, demonstrates explosive adoption as organizations embrace AI capabilities at scale. The exclusive OpenAI partnership provides unmatched access to frontier models, while Azure AI Foundry's general availability supporting 1,900+ models establishes Microsoft as the comprehensive AI development ecosystem. Infrastructure leadership through first-to-market Nvidia GB200 deployment, achieving 865,000 tokens per second throughput, creates insurmountable competitive advantages.
AI integration across Microsoft's portfolio multiplies growth vectors and deepens competitive moats. GitHub Copilot's evolution to autonomous coding agents, accelerating Microsoft 365 Copilot enterprise adoption, and Dynamics 365 AI enhancements drove commercial bookings past $100 billion. With remaining performance obligations hitting $368 billion, up 37% year over year, Microsoft enjoys extraordinary revenue visibility. The company's execution excellence shows in delivering 18% revenue growth to $76.4 billion while expanding operating margins to 44.9%, demonstrating pricing power that will persist as AI becomes mission-critical.
Strategic advantages compound Microsoft's dominance. Leadership in multi-agent orchestration through Copilot Studio, pioneering enterprise AI governance via Entra Agent ID, and establishing industry standards with Model Context Protocol cement architectural control. Azure's 70+ region presence, each AI-optimized with liquid cooling, provides unmatched global scale. Revolutionary services like autonomous SRE Agents and Project Amelie automated ML pipelines position Microsoft years ahead. Microsoft offers unparalleled exposure to AI's transformative potential backed by proven execution and accelerating adoption.
The Zacks Consensus Estimate for Microsoft’s fiscal 2026 earnings is pegged at $15.32 per share, indicating an upward revision of 2.3% over the past 30 days
Microsoft Corporation Price and Consensus
Valuation and Price Performance Comparison
Both stocks carry premium valuations but for opposite reasons. Microsoft's 33.42x forward P/E and 11.92x sales multiple reflect justified confidence in sustained growth, with the stock reaching record highs above $550. Alibaba stock is trading at a 12.92x P/E, masking fundamental deterioration.
BABA vs. MSFT: P/E F12M Ratio
Image Source: Zacks Investment Research
While Microsoft consistently achieves new highs, Alibaba stock has declined 9.3% over the past three months compared with Microsoft’s 15.8% growth.
BABA Underperforms MSFT in 3-Month Period
Image Source: Zacks Investment Research
Conclusion
Microsoft decisively wins this comparison through superior AI execution, dominant positioning, and accelerating momentum. Azure's 39% growth crushes Alibaba's 6% expansion while Microsoft's proven AI monetization contrasts with Alibaba's struggling unit economics. Geographic advantages, regulatory stability, and enterprise trust create sustainable competitive moats that Alibaba cannot overcome despite massive spending. Microsoft's premium valuation reflects genuine growth while Alibaba's discount signals existential risks. Investors should buy Microsoft to capture AI's generational opportunity and sell Alibaba to avoid deteriorating fundamentals, regulatory uncertainty, and strategic displacement threatening permanent capital impairment. MSFT currently carries a Zacks Rank #2 (Buy), whereas Alibaba has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See our %%CTA_TEXT%% report – free today!
7 Best Stocks for the Next 30 Days
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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alibaba vs. Microsoft: Which Cloud Stock to Buy on Better AI Upside?

Key Points
This tech leader is seeing growing demand for cloud services, yet its stock trades at just 14 times expected earnings.
A well-known athleisure superstar looks like it's oversold, and value investors should take a look.
This diversified apparel company could be at the start of a turnaround.
The stock market has shown incredible resiliency in 2025. After shaking off the trade wars and uncertainty for the economy, the S&P 500 is sitting close to new all-time highs. As August, which is historically a weak month for the markets, approaches, there are solid companies trading at reasonable valuations that are worth buying.
If you have $1,000 to commit to a long-term investment plan, read why three Motley Fool contributors like Alibaba (NYSE: BABA), Lululemon Athletica (NASDAQ: LULU), and VF Corp (NYSE: VFC) right now.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
An undervalued tech giant
John Ballard (Alibaba): Shares of Alibaba are starting to climb out of the slump they've been in for the past few years. This is a great time to consider starting an investment in the tech giant. An improving economy in China and strong demand for the company's cloud services are major catalysts that could potentially double the share price within five years.
Alibaba's e-commerce marketplaces, Taobao and Tmall, are posting steady growth in 2025. The March-ending quarter showed these businesses growing customer management revenue by 12% year over year. This primarily comes from fees charged to third-party merchants that sell goods on these marketplaces, which creates very profitable revenue streams for Alibaba.
Alibaba has multiple levers to grow revenue in its e-commerce business. It credited recent growth from several initiatives, including the integration of its Cainiao logistics in its e-commerce business, in addition to new software service fees that helped capture a higher percentage of revenue from merchant activities.
Another catalyst supporting the stock's recovery is strong growth in Alibaba Cloud. Enterprises are adopting artificial intelligence (AI) services at a rapid rate. Alibaba said its AI-related product revenue has grown at a triple-digit rate for seven consecutive quarters. Its investments in AI are positioning the company for strong growth over the next decade.
Despite positive trends across the company, investors can buy shares at just 13.5 times this year's consensus earnings estimate -- a genuine bargain. The stock could double if investors pay a higher multiple of earnings that is consistent with the average S&P 500 price-to-earnings multiple of 30. Wall Street appears to be in the process of rerating Alibaba shares right now, making it a timely buy for the month of August.
Too cheap to ignore
Jennifer Saibil (Lululemon): Lululemon has been having a very tough time over the past few years, and its stock is down around 45% in 2025 alone. However, at the current price, it looks like the market is overselling it, and it's trading at a bargain price.
After many years of strong growth, that growth has decelerated sharply. There are several factors working against it, including pressure in discretionary spending and increasing competition. Lululemon helped create the athleisure movement, but there are low barriers to entry in its industry. In fact, in the premium athleisure space, customers are often looking for the next important and exclusive brand. On top of that, there have been worries about how Lululemon will be affected by tariffs. It's no wonder investors have been losing enthusiasm for the stock.
The 2025 fiscal first quarter (ended May 4) did little to quell the pessimism. Sales increased 7% year over year in the quarter, but comparable sales (comps) were up only 1%. Even worse, they decreased 2% in the Americas region. Management maintained its guidance for a mid-single-digit increase in revenue for the full year, but it revised its guidance down for full-year earnings per share (EPS).
However, there's reason for optimism. Lululemon stock trades at a P/E ratio of only 14, and at this price, it looks like a good value. Lululemon is highly profitable with an operating margin of 18.5%. That was down 1.1 percentage points from last year in the first quarter, mostly due to tariffs. However, it's still industry-leading, way above similar athletic wear and regular apparel companies.
The tariffs situation could be improving as the Trump administration continues to make deals with other countries. And in terms of other countries, although the Americas market has been disappointing, Lululemon is doing very well in China, where sales increased 22% over last year in Q1.
At the current price, it could finally be time to give Lululemon stock another shot, especially if you're looking for a value stock.
A turnaround is afoot at VF Corp.
Jeremy Bowman (VF Corp): With the broad market at an all-time high, it may be a good time for investors to look to beaten-down stocks that could be undervalued.
VF Corp. looks like one of those stocks right now. The apparel brand manager, which owns brands like Vans, The North Face, Timberland, and Dickies, has been one of the worst-performing apparel stocks in the market over the last five years. The stock is down about 85% from its peak in 2021.
Weakness at Vans, a dividend cut, and broader headwinds on consumer discretionary products all weighed on the stock, but VF Corp. showed signs of a turnaround in the fiscal Q1 earnings report on Wednesday.
While overall revenue was flat, the company delivered solid growth at all of its core brands except Vans, which is going through a "channel rationalization," meaning management is reducing the number of distribution points. However, Timberland was up 11%, and The North Face was up 6%. Vans, on the other hand, was down 14%, but the overall business is healthier than it might look.
If management can stabilize Vans and improve profitability, the company should be on good footing. Its adjusted operating loss was much better than expected in Q1, and management's guidance calls for full-year growth in adjusted operating income and free cash flow.
VF Corp. now trades at a price-to-sales ratio of just 0.5. That gives the stock upside potential if it can achieve a profit margin of just 5%, which would equal a price-to-earnings ratio of just 10 at the current P/S ratio.
For a company with a set of well-known premium brands, that should be achievable. If the turnaround continues to make progress, VF could double or triple from here.
Should you invest $1,000 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 $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,257!*
Now, it’s worth noting Stock Advisor’s total average return is 1,036% — a market-crushing outperformance compared to 181% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 29, 2025
Jennifer Saibil has no position in any of the stocks mentioned. Jeremy Bowman has no position in any of the stocks mentioned. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

3 Top Stocks to Buy With $1,000 in August

Key Points
Alibaba's e-commerce business is relatively (although not completely) tariff-resistant.
Tariffs aren't a big issue for Alibaba Cloud, but other U.S. trade policies could be.
Alibaba's greatest threat arguably comes from the Chinese government rather than from the U.S. government.
New York Times columnist Thomas Friedman wrote in his 2005 best-selling book The World Is Flat that countries are more interconnected than ever before. His premise from 20 years ago is still on target.
One downside of this "flat world" is that the trade policies of one country can cause shockwaves for businesses in other countries. We've seen this happen with President Trump's tariffs and threatened tariffs this year.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
But some businesses and stocks are affected by tariffs less than others. Here's how Trump's tariffs could affect Alibaba Group Holding (NYSE: BABA) stock.
E-commerce: Relatively tariff-resistant
Guess how many times Alibaba's executives mentioned tariffs during the company's latest quarterly earnings call? Pat yourself on the back if you answered zero. The only reference that came even close was CEO Eddie WU's mention of "potential uncertainties in global trade regulations."
I think there's a reason why Alibaba's management didn't focus on tariffs like many of their U.S. counterparts. The company generates around 57% of its total revenue from its e-commerce businesses. However, three-fourths of the company's e-commerce revenue comes from its Taobao and Tmall Group operations. These units serve the Chinese market, which wouldn't be directly affected by U.S. tariffs on Chinese imports.
Granted, Alibaba's international digital commerce group contributed roughly 14% of total revenue in the first quarter of 2025. Exactly how much of that revenue stems from the U.S. is uncertain. However, it's fair to say that the company's e-commerce business is relatively (although not completely) tariff-resistant.
Perhaps the greatest impact on Alibaba from Trump's tariffs is an indirect one. The Chinese customers and businesses that use its platforms could feel the pain from retaliatory tariffs imposed by the Chinese government on imports from the U.S.
Cloud services: Tariffs aren't a big issue
Although e-commerce remains Alibaba's biggest revenue source, the company's most important growth driver is its cloud services business. The artificial intelligence (AI) tailwind enjoyed by U.S.-based cloud titans is blowing for Alibaba Cloud, too.
Will U.S. tariffs hurt Alibaba Cloud? Probably not much. For one thing, Alibaba doesn't provide cloud services to customers in the U.S. Even if it did, the tariffs discussed so far apply only to imported products but not services. It's possible, though, that U.S. tariffs could hurt some of Alibaba's Chinese business customers and result in their cutting back on spending for cloud services.
While tariffs shouldn't be a big issue for Alibaba Cloud, other Trump administration trade policies might be a different story. For example, Nvidia (NASDAQ: NVDA) was temporarily barred from shipping any H20 GPUs to China. Although the White House later allowed the company to resume exporting the chips to China, there's no guarantee that further restrictions won't be imposed.
Of course, Alibaba could use other chips to power AI applications. However, Nvidia is an important partner and will likely continue to be as long as its GPUs remain the gold standard for training and deploying AI models.
Overall tariff impact on Alibaba
When all things are considered, President Trump's tariffs could affect Alibaba in some ways, but the Chinese tech giant should be largely unscathed. This assumes, though, that the final tariffs levied on China don't go radically beyond what has been proposed thus far.
Alibaba's greatest threat arguably comes from the Chinese government rather than from the U.S. government. The company's 20-F filing to the U.S. Securities and Exchange Commission acknowledges several ways the government in its home country could negatively affect its business.
These risks are partly to blame for Alibaba's low valuation. Its shares trade at only 14.3 times forward earnings, a much lower multiple than the company's U.S. counterparts. I think this valuation makes the stock a solid pick for long-term investors who aren't overly risk-averse.
Should you invest $1,000 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 $638,629!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,098,838!*
Now, it’s worth noting Stock Advisor’s total average return is 1,049% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 29, 2025
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Here's How Trump's Tariffs Could Affect Alibaba Stock

Key Points
The man behind Alibaba's now-powerful cloud unit gave an interview to Bloomberg.
In it, he expressed a few rather counterintuitive views on the future of artificial intelligence (AI).
A top figure at Alibaba (NYSE: BABA) basically reiterated the company's commitment to artificial intelligence (AI) technology over the weekend, and on Monday, the stock market rewarded the company for this. Shares of the Chinese e-commerce and tech giant were rising by nearly 2% in mid-session trading that day, easily topping the 0.2% slump of the S&P 500 (SNPINDEX: ^GSPC) during that time.
Not so-cloudy vision
Wang Jian, the founder of Alibaba's powerful cloud computing unit, gave an extended interview to Bloomberg that was posted on Sunday. In it, he spoke extensively about what he considers to be the future of AI.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
In Wang's opinion, many people currently have unrealistic expectations of what the technology can do. Much of this, he believes, is due to the emergence and early prominence of OpenAI's ChatGPT, which has focused attention on next-generation chatbot technology. He feels that AI has vastly more potential than that, and that the present level of development will soon be eclipsed.
"Probably 90% of the AI people are talking about, I would say, will go away in five or 10 years because it's not really the essence of this technology," Wang said to thefinancial newsservice.
He opined that developers working on AI applications and processes have to look behind the present hype and chatter in order to determine how the technology could be harnessed for true advancement.
Soaring AI ambitions
While Wang didn't provide granular details of how Alibaba might approach AI going forward, his pronouncements were sensible and realistic, and they obviously struck a chord with investors. Alibaba has the resources, know-how, and financial muscle to be a top AI developer. As such, investors should keep an eye on what comes from its development in the technology.
Should you invest $1,000 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 $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 28, 2025
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Alibaba Was Outpacing the Broader Stock Market Today

Meta Platforms’ META second-quarter 2025 results, set to be reported on July 30, are expected to reflect the benefits of higher advertising revenues.
The Zacks Consensus Estimate for Meta Platforms’ second-quarter advertising revenues is pegged at $43.94 billion, indicating growth of 14.6% year over year.
Meta Platforms’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 17.3%.
Click here to learn how Meta Platforms’ overall second-quarter performance is likely to be.
Strong Ad Spending to Aid META’s Q2 Top Line
META’s staggering reach and increasing ad impressions (up 5% year over year in the first quarter of 2025) make it one of the most important players in the digital ad sales market, apart from Alphabet GOOGL, Amazon AMZN, ByteDance and Alibaba BABA.
Meta Platforms, Inc. Revenue (TTM)
According to EMARKETER, global ad spending is expected to exceed $1 trillion, with 75% going to digital in 2025. In terms of ad revenues, Alphabet is estimated to hit $209.15 billion while Amazon $69.30 billion in 2025. Meta Platforms is expected to hit $183.8 billion. While ByteDance is expected to generate $60.54 billion, Alibaba is anticipated to generate $42.23 billion. The strong momentum in spending is expected to have benefited META’s ad revenues in the to-be-reported quarter.
In the recently concluded second quarter of 2025, Alphabet’s Google advertising revenues rose 10.4% year over year to $71.34 billion and accounted for 74% of total revenues. Search and other revenues accounted for 56.2% of total revenues. YouTube’s advertising revenues improved 13.1% year over year to $9.77 billion, beating the consensus mark by 2.9%.
Meanwhile, Amazon’s advertising business benefits from powerful network effects as more sellers and brands compete for visibility, driving higher pricing and improved margins. With more than 200 million Prime Video viewers globally and expanding connected TV advertising capabilities, Amazon captures growing digital advertising budgets shifting from traditional media channels. The Zacks Consensus Estimate for Amazon’s advertising services is pegged at $14.9 billion, suggesting 16.7% from the figure reported in the year-ago quarter.
Meta Platforms’ focus on improving ad ranking and measurement by leveraging AI has been a key catalyst driving advertisers’ return on investment. META has been leveraging AI and machine learning to boost the potency of WhatsApp, Instagram, Facebook and Threads. Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst. Meta Platforms is committed to prioritizing user safety and well-being through initiatives to enhance parental supervision, messaging privacy, and time management on its platforms. These factors are expected to have driven user base growth in the second quarter of 2025.
META’s Ad Revenue Estimates Show Strong Growth Trend
The Zacks Consensus Estimate for advertising revenues in Asia-Pacific is pegged at $8.71 billion, indicating year-over-year growth of 12.8% in the second quarter of 2025. The consensus mark for advertising revenues in Europe, the United States and Canada, and the Rest of the World is pegged at $10.52 billion, $19.59 billion and $5.89 billion, respectively, indicating 15.2%, 26.8% and 20.7% growth.
The consensus mark for Family Daily Active People or DAP, defined as a registered and logged-in user who visited at least one of the Family products (Facebook, Instagram, Messenger or WhatsApp) on a given day, is expected to be 3.35 billion for the second quarter of 2025.
Zacks Rank & Upcoming Earnings
Meta Platforms currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amazon, another Zacks Rank #1 company, is set to report second-quarter 2025 earnings results on July 31.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include
Stock #1: A Disruptive Force with Notable Growth and Resilience
Stock #2: Bullish Signs Signaling to Buy the Dip
Stock #3: One of the Most Compelling Investments in the Market
Stock #4: Leader In a Red-Hot Industry Poised for Growth
Stock #5: Modern Omni-Channel Platform Coiled to Spring
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.
Download Atomic Opportunity: Nuclear Energy's Comeback free today.
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
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alibaba Group Holding Limited

Trend

Trend Class

Trend Power

Pattern

EMA

EMA-20

EMA-50

EMA-100

EMA-20

EMA-50

EMA-100

Oscillators

Stochastic

RSI

MACD

Candle pattern type