Just last week, Alibaba was everywhere again. Headlines about AI-driven Cloud momentum, a new $3.2B convertible note to fund growth, and a double-digit jump in Hong Kong turned BABA into 2025’s comeback kid. Bulls say the rerate is only beginning as investors reframe Alibaba as a Cloud/AI story, not just Chinese e-commerce. Bears counter that macro/regulatory overhangs and modest group-level growth could cap the move. So I dug in — across earnings, analyst notes, and market coverage — to weigh both sides with clear reasoning, not hype
But dig deeper, and not everything shines. That income jump? Mostly mark-to-market gains from securities — not core operating profit. We’ve learned from Buffett that those swings don’t reflect real business strength.
Still, Alibaba’s comeback has been dramatic. From $58 at the lows to $135 now, investors are wondering if this is a genuine turning point — or just noise in a stock that’s been beaten down too far.
So, I pulled together a debate to make sense of it all.
Opening Remarks
David Wong (Equity Strategist, Citi — Bullish):
“Cloud computing is finally delivering. Sales rose 26% YoY, AI revenue surged triple-digits, and Alibaba has raised $3.2B through a zero-coupon convertible note to fuel further AI build-outs. That’s a structural pivot — not a sugar high. After years of undervaluation, the market is finally starting to price in Alibaba’s true potential.”
Rachel Kim (China Tech Commentator, Barron’s — Bearish):
“David, but net income headlines were misleading — that 76% jump came from accounting gains, not operating growth. Core commerce remains sluggish, squeezed by Pinduoduo and Douyin. And with new restrictions on high-end chips, Alibaba’s AI push could hit supply roadblocks. Investors should be cautious: the rally may be overextended.”
Earnings Dissection
Michael Torres (Tech Analyst, Investors.com — Bullish):
“Yes, reported net income was inflated by mark-to-market. But strip that out, and you’ll see gross margins up, e-commerce accelerating, and several subunits nearing profitability. That’s what matters. Alibaba is in a heavy investment cycle — like Amazon was before AWS scale. The fundamentals are improving.”
Priya Desai (Equity Researcher, Investing.com — Bearish):
“Michael, I’m not convinced. Alibaba’s growth is ‘all over the place’ — Cloud and AI shine, but commerce is flat, logistics is margin-draining, and new ventures keep bleeding cash. That’s poor capital discipline. They plow money into hype projects with no moat. Until management shows focus, earnings quality won’t support this valuation.”
Bullish Value Investing Case
Mark Evans (Independent Investor — Bullish):
“At a P/FCF of ~10, Alibaba trades like a tobacco stock — absurd for a Cloud/AI leader. The market gave zero value to assets like Ant, Lazada, Freshippo, Trendyol, Cainiao, plus the cash and equity stakes. That’s changing. I was buying between $70–100, and I still see fair value at $240+ — with a real shot at a 5x in 5 years if Cloud creates a flywheel. Fundamentals are way stronger than the narrative.”
AI & Narrative Shift
Charu Chanana (Chief Strategist, Saxo Markets — Bullish):
“Alibaba’s latest earnings highlight the bifurcation in China tech: AI and Cloud are scaling, while consumer platforms are trapped in price wars. The triple-digit AI revenue surge shows Alibaba is repositioning for tech stack relevance beyond retail. This isn’t hype — it’s traction.”
Sophie Müller (Industry Analyst, Mitrade — Bearish):
“But let’s not overstate it. Partnerships and AI demos don’t guarantee monetization. Competition from Tencent, Huawei, and even ByteDance in enterprise services is fierce. And with policy risk ever-present, Alibaba could stumble before Cloud becomes its AWS.”
Short-Term Noise vs. Long-Term Thesis
Alex Johnson (Retail Investor — Bearish/Short):
“After Jack Ma’s Bloomberg interview and the flashy launch of Qwen AI glasses, I think this is just noise pumping the stock. It was up 2.4% on that hype. Great time to short in my view — the real issues in consumer demand and capital discipline haven’t gone away. People chasing headlines are setting themselves up.”
James O’Connor (Contributor, Nasdaq — Bullish):
“Alex, shorting Alibaba here is dangerous. Remember, this stock was crushed to $58. A rally to $135 still leaves it historically cheap if Cloud growth continues. Sometimes ‘noise’ is just the early sign of a sentiment shift that sticks.”
Sentiment from Long-Term Holders
Linda Zhao (Tech Reporter, Investing.com — Neutral):
“As someone who’s spoken with long-time BABA holders, I see the scars. Many are still down 60–70% from Ant IPO days. They’re holding to break even. That kind of overhead supply caps rallies. And they’re not wrong: years of poor capital allocation and Party oversight make Alibaba a tough trust story. At the end of the day, you’re never fully in control with Beijing at the table.”
Balanced Perspective
Maria Lopez (Columnist, Bloomberg — Neutral):
“This earnings print was classic Alibaba: moments of brilliance, moments of confusion. Cloud/AI growth is real, net income headlines are inflated, and consumer commerce remains sluggish. The rally reflects beaten-down sentiment meeting fresh optimism. But for a true comeback story, Alibaba must deliver consistent Cloud execution, margin expansion, and smarter capital discipline — quarter after quarter.”
Retail Investor Takeaways
Earnings: Ignore mark-to-market gains; focus on operating profit and margins.
Valuation: P/FCF at ~10 makes Alibaba cheap, but execution must catch up.
Cloud/AI: Growth is the real story — +26% Cloud, triple-digit AI.
Consumer weakness: Deflation + competition = margin squeeze in e-commerce.
Policy risk: Chip restrictions and Beijing oversight always loom.
Sentiment: Stock has doubled off lows, but supply from bagholders could cap momentum.
Personally (not advice):
Alibaba feels like a stock with two faces. On one hand, the rally is justified: Cloud and AI are finally delivering, and valuation is still cheap compared to global peers. On the other hand, consumer softness, chip constraints, and governance issues remain unsolved.
If you’re bullish, the story is: “buy the Cloud optionality and wait for Beijing to stimulate.” If you’re bearish, it’s: “consumer malaise and policy will cap upside.”
My own stance? I treat Alibaba as an opportunistic trade, not a long-term compounder. All these AI Cloud names — whether in the U.S. or China — behave like elastics: a small positive surprise triggers a 20–30% surge, but the reverse is equally true. Managements know this game, and they lean into it.
I plan to accumulate Alibaba for short-term gains, keeping a close eye on AI Cloud revenue as the single KPI. I’ll hold as long as that line keeps climbing — and the moment it weakens in any quarter, I’ll exit.
For timing, I believe the sweet spot is about one month before earnings. That’s when the last earnings hype has cooled off, prices are calmer, and you can position ahead of the next potential Cloud/AI revenue bump.
For me, this isn’t about long-term moats yet. It’s a tactical, earnings-cycle-driven play — not a core holding.