PDD Holdings Inc., a multinational commerce group, owns and operates a portfolio of businesses. It operates Pinduoduo, an e-commerce platform that offers products in various categories, including agricultural produce, apparel, shoes, bags, mother and childcare products, food and beverage, electronic appliances, furniture and household goods, cosmetics and other personal care, sports and fitness items and auto accessories; and Temu, an online marketplace. It focuses on bringing businesses and people into the digital economy. The company was formerly known as Pinduoduo Inc. and changed its name to PDD Holdings Inc. in February 2023. PDD Holdings Inc. was incorporated in 2015 and is based in Dublin, Ireland.

PDD Holdings Inc.

Last Friday, the three most widely followed benchmark indexes closed a winning week. The tech-heavy Nasdaq, the Dow Jones and the S&P 500 gained 2.3%, 2.2% and 1.9%, respectively.
The S&P 500 and Nasdaq registered their sharpest weekly advances since August, while the Dow Jones Industrial Average recorded its strongest weekly show since June.
The week’s trading reflects a mix of reduced trade-war fears between the United States and China, inflation coming in cooler than expected and U.S. sanctions on Russian oil firms shifting the energy market. The weaker-than-forecast inflation reading bolstered hopes for a rate cut by the Fed, lifting investor sentiment. Next week, markets will focus on upcoming central-bank commentary and big tech earnings.
Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.
As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.
Here are some of our key achievements:
Micron and Napco Security Surge Following Zacks Rank Upgrade
Shares of Micron Technology, Inc. MU have gained 77.3% (versus the S&P 500’s 5.3% increase) since it was upgraded to a Zacks Rank #1 (Strong Buy) on August 19.
Another stock, Napco Security Technologies, Inc. NSSC, which was also upgraded to a Rank #1 on August 28, has returned 14.8% (versus the S&P 500’s 4.7% increase) since then.
A hypothetical portfolio of Zacks Rank # 1 (Strong Buy) stocks returned +8.64% in 2025 (through September 1st) vs. +7.60% for the S&P 500 index.
This portfolio returned +22.4% in 2024, vs. +28% for the S&P 500 index and +19.9% for the equal-weight version of the S&P 500 index.
This hypothetical portfolio returned +20.65% in 2023 vs. +24.83% for the S&P 500 index and +15% for the equal-weight S&P 500 index.
The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by more than 12 percentage points since 1988 (through September 1st, 2025, the Zacks # 1 Rank stocks generated an annualized average return of +23.8% vs. +11.3% for the S&P 500 index).
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Zacks Recommendation Upgrades PDD and Seacoast Banking
Shares of PDD Holdings Inc. PDD and Seacoast Banking Corporation of Florida SBCF have surged 9.6% (versus the S&P 500’s 4.4% rise) and 6.7% (versus the S&P 500’s 6.1% rise), respectively, since their Zacks Recommendation was upgraded to Outperform on August 29 and August 21.
While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.
The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.
To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>
Zacks Focus List Stocks Lam Research, Shopify Shoot Up
Shares of Lam Research Corporation LRCX, which belongs to the Zacks Focus List, have gained 56.4% over the past 12 weeks. The stock was added to the Focus List on December 5, 2016. Another Focus-List holding, Shopify Inc. SHOP, which was added to the portfolio on September 6, 2022, has returned 39% over the past 12 weeks. The S&P 500 has advanced 6.3% over this period.
The 50-stock Focus List portfolio returned 18.3% in 2025 (through September 30th, 2025) vs. +14.8% for the S&P 500 index and +9.9% for the equal-weight version of the index.
The Zacks Focus List portfolio returned +18.41% in 2024 vs. +25.04% for the S&P 500 index and +13% for the equal-weight S&P 500 index. The portfolio had returned +29.54% in 2023 vs. +26.28% for the S&P 500 index and +13.61% for the equal-weight S&P 500 index. In 2022, the portfolio returned -15.2% vs. the S&P 500 index’s -17.96%.
The portfolio leads the broader market over the preceding one, three, five and ‘since 2004’ periods. These annualized return comparisons are: +16.96% for the Focus List vs. +17.60% for the index over the one-year period, +26.77% vs. +24.94% over the 3-year period, +17.38% vs. +14.48% over the 5-year period, and +12.13% vs. +10.71% since 2004.
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Zacks ECAP Stocks Thermo Fisher & Fair Isaac Make Significant Gains
Thermo Fisher Scientific Inc. TMO, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 19.7% over the past 12 weeks. Fair Isaac Corporation FICO has followed Thermo Fisher with 8.8% returns.
The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned +0.20% in the second quarter of 2025 vs. the S&P 500 index’s +10.94% gain (SPY ETF). In the year-to-date period through June 30th, the portfolio returned +3.93% vs. +6.20% gain for the S&P 500 index.
For the year 2024, the portfolio returned +16.26% vs. +24.89% for the S&P 500 index (SPY ETF).
In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. the S&P 500 index’s -17.96%.
With little to no turnover and annual rebalance periodicity, ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.
The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.
Zacks ECDP Stocks UnitedHealth and 3M Outperform Peers
UnitedHealth Group Incorporated UNH, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 29% over the past 12 weeks. Another ECDP stock, 3M Company MMM, has climbed 11.4% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid heightened market volatility contributed to this performance.
With an extremely low beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps significantly mitigate risk.
The Zacks Earnings Certain Dividend Portfolio (ECDP) returned -3.17% in 2025 Q2 vs. the S&P 500 index’s +10.94% gain and the Dividend Aristocrats ETF’s (NOBL) -0.09% return. Year-to-date (through June 30th), the portfolio returned +2.38% vs. +2.18% gain for the Dividend Aristocrat ETF.
For the full year 2024, the portfolio returned +6.95% vs. +24.89% for the S&P 500 index and +6.72% for NOBL.
The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.
Click here to access this portfolio on Zacks Advisor Tools.
Zacks Top 10 Stock Credo Technology Delivers Solid Returns
Credo Technology Group Holding Ltd CRDO, from the Zacks Top 10 Stocks for 2025, has jumped 131.4% year to date compared with the S&P 500 Index’s 15.6% increase.
The Top 10 portfolio returned +26.47% this year (through the end of September 2025) vs. +14.84% for the S&P 500 index and +9.9% for the equal-weight version of the index.
The Top 10 portfolio returned +62.98% in 2024, vs. +25.04% for the S&P 500 index and +13% for the equal-weight version of the index. The portfolio had returned +25.15% in 2023 vs. +26.28% for the S&P 500 index.
Since 2012, the Top 10 portfolio has produced a cumulative return of +2,553.1% through the end of September 2025 vs. +545.2% for the S&P 500 index and +396.4% for the equal-weight version of the index. The portfolio has produced an average return of +26.6% in the period 2012 through September 30, 2025, vs. +13.1% for the S&P 500 index and +10.5% for the equal-weight version of the index.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Beat the Market the Zacks Way: PDD, Shopify, 3M in Focus

Below is Validea's guru fundamental report for PDD HOLDINGS INC - ADR (PDD). Of the 22 guru strategies we follow, PDD rates highest using our Small-Cap Growth Investor model based on the published strategy of Motley Fool. This strategy looks for small cap growth stocks with solid fundamentals and strong price performance.
PDD HOLDINGS INC - ADR (PDD) is a large-cap growth stock in the Retail (Specialty) industry. The rating using this strategy is 75% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of PDD HOLDINGS INC - ADR
More Information on Motley Fool
About Motley Fool: Brothers David and Tom Gardner often wear funny hats in public appearances, but they're hardly fools -- at least not the kind whose advice you should readily dismiss. The Gardners are the founders of the popular Motley Fool web site, which offers frank and often irreverent commentary on investing, the stock market, and personal finance. The Gardners' "Fool" really is a multi-media endeavor, offering not only its web content but also several books written by the brothers, a weekly syndicated newspaper column, and subscription newsletter services.
Additional Research Links
Dividend Aristocrats 2023
High Insider Ownership Stocks
Excess Returns Investing Podcast
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Validea Detailed Fundamental Analysis - PDD

The iShares MSCI China Multisector Tech ETF is seeing unusually high volume in afternoon trading Tuesday, with over 93,000 shares traded versus three month average volume of about 29,000. Shares of TCHI were down about 3.3% on the day.
Components of that ETF with the highest volume on Tuesday were Pdd Holdings, trading down about 0.5% with over 2.6 million shares changing hands so far this session, and Tencent Music Entertainment Group, down about 1.9% on volume of over 2.4 million shares. Autohome is the component faring the best Tuesday, higher by about 0.6% on the day, while Vipshop Holdings is lagging other components of the iShares MSCI China Multisector Tech ETF, trading lower by about 2.9%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tuesday's ETF with Unusual Volume: TCHI

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 First Trust Nasdaq BuyWrite Income ETF (Symbol: FTQI), we found that the implied analyst target price for the ETF based upon its underlying holdings is $22.77 per unit.
With FTQI trading at a recent price near $20.73 per unit, that means that analysts see 9.84% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of FTQI's underlying holdings with notable upside to their analyst target prices are TotalEnergies SE (Symbol: TTE), MPLX LP (Symbol: MPLX), and PDD Holdings Inc (Symbol: PDD). Although TTE has traded at a recent price of $57.59/share, the average analyst target is 22.63% higher at $70.62/share. Similarly, MPLX has 17.70% upside from the recent share price of $48.64 if the average analyst target price of $57.25/share is reached, and analysts on average are expecting PDD to reach a target price of $145.25/share, which is 13.88% above the recent price of $127.55. Below is a twelve month price history chart comparing the stock performance of TTE, MPLX, and PDD:
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
First Trust Nasdaq BuyWrite Income ETF
FTQI
$20.73
$22.77
9.84%
TotalEnergies SE
TTE
$57.59
$70.62
22.63%
MPLX LP
MPLX
$48.64
$57.25
17.70%
PDD Holdings Inc
PDD
$127.55
$145.25
13.88%
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.
Also see:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Implied FTQI Analyst Target Price: $23

Tariffs, Social Shopping, and an EV Reset

JD.com JD shares have plunged 18.4% in the past year, underperforming the Zacks Internet-Commerce industry’s growth of 18.7% and the Zacks Retail-Wholesale sector’s return of 11.6%. The decline reflects cautious sentiment toward JD’s shifting business mix, near-term margin pressures and slower cash flow recovery as it invests in new verticals and international operations.
This sharp divergence from industry peers raises the question of whether the current price levels present a buying opportunity or signal further challenges ahead for investors considering this Chinese e-commerce giant. Let’s delve deeper to find out.
JD Underperforms Sector & Industry in the Past Year
Image Source: Zacks Investment Research
Food Delivery Struggles Weigh on Profitability
JD’s ambitious expansion into food delivery has become a notable drag on financial performance, with the new businesses segment reporting an operating loss of RMB 14.8 billion in the second quarter of 2025. Launched less than a year ago, the venture has achieved strong order growth but at unsustainable cost levels. Competitive intensity is likely to remain elevated through late 2025, compelling JD to continue offering heavy subsidies and promotional incentives to sustain user and merchant growth. The company’s rapid onboarding of over 1.5 million restaurants and a delivery workforce exceeding 150,000 underscores the scale of operational spending and the uncertainty surrounding its near-term returns.
The initiative marks a structural pivot for JD, from a centralised, inventory-driven retail model to a hyperlocal, on-demand logistics network that will define its next phase of growth. Over the coming quarters, the company is expected to deepen integration between food delivery and core retail categories like supermarkets and lifestyle goods to drive higher user engagement and repeat spending. However, achieving scale efficiency in real-time logistics will take time. Unit economics are projected to remain under pressure through 2025, with meaningful margin recovery likely only once route density improves and subsidy intensity eases.
Competition and Diversification Intensify Cash Flow Strain
JD faces a dual challenge as intensifying competition and diversification weigh on its financial flexibility. PDD Holdings PDD continues to expand its market share through aggressive discounting and social commerce promotions, compelling JD to maintain higher marketing spend. Alibaba BABA is deepening its asset-light marketplace strategy, sustaining price pressure across categories such as fashion and consumer goods, where margins are already thin. Globally, Amazon AMZN sets the benchmark for delivery speed and membership benefits, shaping user expectations that JD must increasingly meet.
At the same time, JD’s diversification into new verticals such as food delivery, property and overseas logistics is absorbing significant capital. The company’s free cash flow has narrowed sharply to RMB 10.1 billion on a trailing twelve-month basis, down from RMB 56 billion a year earlier, reflecting investment-heavy growth and working capital pressure. The Zacks Consensus Estimate for JD’s third-quarter 2025 revenues is pegged at $41.21 billion, indicating an 11.06% year-over-year increase, while the consensus mark for 2025 revenues is pegged at $183.33 billion, suggesting a modest 5.15% rise. The slower pace signals that cash generation may remain tight even as top-line growth continues.
Although JD holds RMB 223 billion in cash and short-term investments, ongoing investments in logistics, food delivery and international ventures could constrain liquidity. PDD Holding’s lean model shows profitability is achievable despite price competition, while Alibaba’s restructuring underscores the difficulty of balancing diversification with efficiency. Without high-margin offsets like Amazon’s cloud operations, JD must emphasise cost discipline and capital efficiency to stabilise margins and rebuild investor confidence over time.
Valuation Considerations
JD shares are undervalued, as suggested by the Value Score of A, indicating that the stock trades below intrinsic value levels relative to peers. JD currently trades at a forward 12-month price-to-earnings ratio of 10.34x, well under the industry’s average of 24.11x and the sector’s average of 24.5x. In comparison, PDD Holdings trades at 11.63x, Alibaba at 19.57x and Amazon.com at 30.42x, suggesting the depth of JD’s valuation discount within the global e-commerce group.
The valuation discount also reflects JD’s ongoing transition toward a more diversified growth model. The proposed CECONOMY acquisition in Europe could strengthen its international presence and add a new revenue stream from higher-margin markets once integration is completed. Continued investment in food delivery, logistics and overseas operations is expanding JD’s ecosystem reach and positioning it to capture incremental consumer demand beyond its core retail base.
These initiatives may weigh on near-term margins but are aimed at building scalable platforms with stronger long-term monetisation potential. As operating efficiency improves and new businesses begin contributing meaningfully to earnings, the current valuation gap could narrow, unlocking upside over time.
JD’s Shares Trade at a Discount
Image Source: Zacks Investment Research
Investment Consideration
The Zacks Consensus Estimate for JD’s third-quarter 2025 earnings is pegged at 44 cents per share, unchanged over the past 30 days. The estimate implies a 64.52% year-over-year decline, highlighting continued cost pressure from food delivery, overseas expansion and marketing spend. While revenue growth remains subdued, margins are likely to stay compressed through 2025 as JD balances diversification with cash flow constraints.
JD.com, Inc. Price and Consensus
Execution discipline will remain critical. The pace of cost optimisation and integration of its European operations will determine when margins begin to stabilise. For now, JD is expected to remain in a reinvestment phase with a focus on strengthening its ecosystem rather than near-term earnings expansion.
Conclusion
JD’s 18.4% share price decline over the past year reflects investor caution amid slower cash flow recovery and margin pressure from diversification. The company’s reinvestment strategy, while weighing on near-term profitability, aims to build a broader, more resilient ecosystem spanning retail, logistics and on-demand services. Competitive intensity from peers continues to shape the operating landscape, but JD’s supply-chain strengths and execution discipline could support gradual improvement once spending normalises.
JD currently carries a Zacks Rank #3 (Hold), suggesting prudent investors may consider holding positions while waiting for attractive entry points in the future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

JD Declines 18% in a Year: Should You Buy, Sell or Hold the Stock?

Key Points
MercadoLibre is growing revenue above 30%.
But profitability is slipping as shipping and logistics costs rise.
Competition from Shopee, Temu, and Nubank means MercadoLibre must balance growth with profitability more carefully.
When investors think about MercadoLibre (NASDAQ: MELI), the story has always sounded straightforward: a dominant e-commerce and fintech platform with enormous growth potential in Latin America. The company has been called the "Amazon" of the region, and for years, that comparison worked.
But the latest results suggest a more nuanced reality. Growth is still strong, yet profitability is under pressure, costs are climbing, and competition is intensifying. That doesn't break the thesis -- but it does make MercadoLibre a riskier stock than it was a year ago.
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MercadoLibre is growing nicely
Start with the positives. MercadoLibre is still expanding at a pace that most global tech companies would envy. In the second quarter of 2025, net revenue rose 34% year over year to $6.8 billion, driven by nearly 37% growth in gross merchandise value (GMV) on a forex-neutral basis. The company now counts more than 71 million unique buyers, a 25% increase from the prior year.
Its fintech arm, Mercado Pago, is also scaling impressively. The credit portfolio jumped 91% year over year to $9.3 billion, while short-term default rates improved from 8.2% a year ago to 6.7%. Customer adoption is broadening as well: Mercado Pago had 68 million monthly active users, many of whom are using it not just for e-commerce but also for everyday transactions, savings, and credit.
Those numbers reinforce a key point: MercadoLibre's ecosystem is sticky. The combination of marketplace, logistics, and payments keeps users engaged and competitors at bay. For a company operating in 18 countries in Latin America, that kind of scale is formidable.
MercadoLibre is doubling down on investment
At the same time, MercadoLibre is doubling down on reinvestment in key markets Brazil, Mexico and Argentina, estimating an investment of around $13 billion in 2025. Those dollars will go into the development of logistics hubs, technology upgrades, and expanding its payments infrastructure.
In the long run, these investments are essential. Faster deliveries make the marketplace more competitive, better payment rails deepen fintech adoption, and new technology supports the company's scale.
But in the short run, they add to costs -- and make MercadoLibre more exposed to macroeconomic volatility.
But margins are coming under pressure
But growth hasn't come without trade-offs. Profitability was the soft spot in Q2 2025. Net income of $523 million analyst expectations, and operating margin slipped to 12.2% from 14.3% a year earlier.
The culprit was primarily shipping. Facing mounting competition in Brazil -- particularly from Shopee and Temu -- MercadoLibre slashed its free-shipping threshold from 79 reais to 19 reais (roughly $3.40). The move worked, boosting volumes and engagement, but it also hurt margins. Moreover, logistics and shipping costs will likely remain elevated in the near term as the company works to defend its share.
While this move has largely helped the tech company keep customers coming back, it underscores a bigger risk: In markets where consumer purchasing power is limited, price sensitivity is high. If MercadoLibre has to lean on subsidies and free shipping continuously, it could put sustained pressure on its long-term profitability.
In other words, margins could remain depressed -- or even declining further in the coming quarters.
And there are other challenges ahead
Latin America itself adds another layer of complexity. Inflation, currency swings, and political shifts remain part of the equation. The Argentine peso continues to be a headwind, while Brazil and Mexico -- though offering scale -- are also highly competitive markets.
Speaking of competition, Shopee has overtaken MercadoLibre by order volume in Brazil, relying on subsidies and gamified shopping to win cost-conscious consumers. Temu, owned by PDD Holdings, is flooding the region with ultra-cheap goods shipped from China. Meanwhile, Nubank is expanding aggressively in digital finance, challenging Mercado Pago's dominance.
Put together, these pressures make MercadoLibre's execution even more critical. It's not enough to grow; the company must grow efficiently and defensively. The silver lining is that Latin America is a vast market, so many players can compete and still do well in the long run.
What it means for investors
So, is MercadoLibre still a solid growth stock? The answer is yes -- but with caveats.
The opportunity remains massive. Latin America's e-commerce penetration is still relatively low compared to developed markets, and digital payments adoption has plenty of room to grow.
The moat is intact. MercadoLibre's scale, logistics network, and fintech flywheel are powerful advantages.
But the risks are higher. Margin pressure, rising reinvestment, and a more challenging competitive landscape make the path forward less predictable.
MercadoLibre isn't broken. But it's no longer the simple growth story it was five years ago.
For long-term investors, the company still represents one of the best ways to play Latin America's digital transformation. The difference now is that execution risk sits front and center -- and that means investors must actively track the company's performance in the coming quarters.
Should you invest $1,000 in MercadoLibre right now?
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Lawrence Nga has positions in PDD Holdings. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool recommends Nu Holdings. 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.

Is MercadoLibre Becoming a Riskier Growth Story?

In early trading on Tuesday, shares of PDD Holdings topped the list of the day's best performing components of the Nasdaq 100 index, trading up 2.6%. Year to date, PDD Holdings registers a 38.2% gain.
And the worst performing Nasdaq 100 component thus far on the day is Paychex, trading down 5.8%. Paychex is lower by about 13.6% looking at the year to date performance.
Two other components making moves today are Intel, trading down 3.8%, and Synopsys, trading up 1.8% on the day.
VIDEO: Nasdaq 100 Movers: PAYX, PDD
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Nasdaq 100 Movers: PAYX, PDD

Key Points
Cloud and AI are Alibaba's growth engines.
Its valuation remains attractive even after the rally.
Competition, macro uncertainty, and regulatory risks remain, but early signs of strategy execution and sentiment shifts suggest the recovery may not be over.
Alibaba Group (NYSE: BABA) has tested investors' patience over the past few years. Regulators cracked down, China's consumer spending slowed, and rivals like Pinduoduo and Meituan intensified competition. The company went from China's undisputed tech champion to a stock that many investors abandoned.
In 2025, the story shifted. Alibaba's stock surged nearly 87% in the last 12 months (as of this writing on September 17), crushing the Hang Seng Index and even outpacing the Nasdaq Composite. With such a sharp rebound, investors now face the question: Should they take profits, or hold on for more upside?
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What fueled the rally?
The recent rally isn't just sentiment-driven -- Alibaba has started delivering tangible progress in areas investors care about.
In its June 2025 quarter (fiscal Q1 2026), the company reported revenue of RMB 248 billion ($34.6 billion), up 10% year over year (on a like-for-like basis), marking a return to double-digit growth after a stretch of stagnation. More importantly, its cloud business has become the standout performer. Alibaba Cloud revenue surged 26% to RMB 33.4 billion ($4.7 billion), and management disclosed that AI-related revenue grew at triple-digit rates for the eighth consecutive quarter.
That shift is critical because cloud and AI are where the growth is, compared to Alibaba's traditional e-commerce business. With its large language model, Tongyi Qianwen, already integrated across enterprise and consumer applications, Alibaba is positioning itself not just as an e-commerce leader but as an AI platform provider.
Meanwhile, Alibaba has also leaned into growth areas like quick commerce to defend engagement against Meituan and Pinduoduo. While costly in the short term, these moves show management is willing to play offense again rather than simply cutting costs. So far, the outcome has been solid, with e-commerce growing at 10% year over year in the latest quarter.
Together, stronger results, a credible AI story, and signs of renewed strategy execution have fueled the stock's rebound.
The risk of selling too soon
After a near doubling in share price, it's tempting to lock in gains. But selling stock now can mean missing out on the next leg higher.
Alibaba's stock remains far below its peak valuation. At a price-to-sales ratio of just 2.8, shares trade at a fraction of their 2020 multiple of around 7-9 times. Even after the rally, Alibaba is valued more like a retailer than a dominant technology platform with multiple growth levers.
Investor sentiment is also just beginning to shift. In recent weeks, analysts at Mizuho, Bernstein, and Citi raised their price targets or reiterated bullish ratings, citing cloud momentum and AI adoption as underappreciated catalysts. If earnings momentum continues, more institutional investors may return to the stock, driving a potential rerating.
In short, the fundamentals don't suggest Alibaba has already "topped out." Instead, the recovery could be in its early stages if execution holds up.
Alibaba has plenty of work remaining to do
Still, the rally is not entirely risk-free. Alibaba still faces fierce competition in its core e-commerce business from Pinduoduo's low-price strategy and Meituan's dominance in local services. Profitability has also come under pressure from its heavy investments in quick commerce, which weighed on earnings last quarter despite healthy revenue growth. For perspective, non-GAAP net income fell 18% in the latest quarter despite improving revenue.
Geopolitics remains another overhang. U.S.-China tensions around technology exports could complicate Alibaba's cloud and AI ambitions, though the company is hedging this risk by developing its own domestic AI chips.
These factors mean investors should expect volatility ahead, even if the long-term trajectory improves.
What it means for investors
Alibaba's massive rally in 2025 is impressive, but context matters. The stock has rebounded from depressed levels and still trades at attractive valuations. The company's cloud and AI growth show genuine signs of transformation, and early sentiment shifts hint that institutional investors are beginning to take notice.
At the same time, Alibaba isn't out of the woods yet. Competition, macro uncertainty, and regulatory risks remain part of the story.
That's why the best framing may be this: Alibaba is moving from being a "broken" stock to one with optionality again. In other words, the recovery may have more room to run, provided Alibaba executes on its cloud, AI, and commerce strategies in the coming quarters.
For long-term investors, that makes holding -- rather than selling into the rally -- a reasonable approach.
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Citigroup is an advertising partner of Motley Fool Money. Lawrence Nga has positions in Alibaba Group and PDD Holdings. 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.

Alibaba Stock Is Up 87%. Time to Sell?

Alibaba’s BABA International Digital Commerce (AIDC) segment is fast becoming one of its most promising growth drivers. In the first quarter of fiscal 2026, AIDC posted 19% year-over-year revenue growth, supported by platforms like AliExpress and Trendyol, while significantly narrowing losses and moving closer to breakeven. Management emphasized improved efficiency and cost control, underscoring a shift toward profitability.
The momentum is being powered by cross-border demand, localized logistics and stronger monetization. AliExpress continues to expand in Europe, Russia and Latin America, while Trendyol strengthens its leadership in Turkey and expands into the Gulf region. Both platforms are benefiting from AI-driven merchant tools and advertising solutions, which are raising take rates and boosting revenue per user. These strategies are aligning AIDC more closely with Alibaba’s high-margin domestic commerce model.
Operational discipline is another key factor. Alibaba has tightened costs, scaled logistics infrastructure and leveraged its ecosystem of payments and marketing tools to replicate synergies from its China business. AIDC’s adjusted EBITDA loss narrowed sharply, signaling that breakeven is within reach if current momentum is sustained.
Still, challenges remain. Intense competition from rivals and rising supply and fulfillment costs, as well as currency and regulatory risks, could put pressure on margins. However, AIDC is positioning itself as a long-term growth pillar. With the Zacks Consensus Estimate projecting revenue growth of 4.38% in fiscal 2026 and 11% in fiscal 2027, sustained execution is expected to transform AIDC into a profitability engine, reinforcing Alibaba’s global e-commerce leadership.
BABA Confronts Fierce Competition in Global Markets
Amazon AMZN dominates international digital commerce with unmatched logistics infrastructure, strong brand trust in Western markets and diversified revenues led by Amazon Web Services. Its scale, fast delivery and customer service give it a competitive edge over Alibaba’s global platforms like AliExpress and Lazada. While Alibaba leads in China and is expanding abroad, Amazon remains its strongest global rival, excelling in cross-border e-commerce, fulfillment and cloud-powered innovation.
PDD Holdings PDD is rapidly expanding worldwide, with Temu’s low-cost sourcing and swift entry into the United States and Europe attracting price-sensitive shoppers through aggressive pricing and promotions. While Alibaba’s international platforms pursue a broader marketplace strategy, PDD Holdings differentiates itself with a lean model and unique social commerce innovations from Pinduoduo, such as group buying. This agility and efficiency position PDD Holdings as Alibaba’s strongest challenger in global digital commerce.
BABA’s Share Price Performance, Valuation & Estimates
BABA shares have surged 96.5% in the year-to-date period, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 15.4% and 10.8%, 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 17.41X compared with the industry’s 25.54X. BABA has a Value Score of C.
BABA’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for the full-year fiscal 2026 earnings is pegged at $8.09 per share, down 5.7% over the last 30 days, indicating a 10.21% year-over-year decline.
Image Source: Zacks Investment Research
Alibaba currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.