Why Alibaba’s Stock Is On The Rise
Alibaba trades at just 11.7x forward earnings, an unusually low multiple for a company with a dominant cloud business, global e-commerce scale, and double-digit growth abroad.
Tariffs, domestic competition, and geopolitics remain real risks, but more fundamentally, can it defend its home turf while scaling globally faster than it bleeds market share?
E-commerce Business Analysis
Alibaba faces pressure from domestic rivals like Pinduoduo, Douyin, and Kuaishou in China’s social commerce space.
However, international expansion provides growth opportunities. Alibaba International Digital Commerce Group (AIDC) has seen growth driven by its cross-border business, with AliExpress showing improved unit economics.
Cloud Computing Performance
Alibaba Cloud is a key growth engine with 18% year-over-year growth in revenue for the quarter ending March 31, 2025, though it faces strong global competition.
While Alibaba dominates China’s cloud market with a 39% share, global expansion remains challenging. AWS, Microsoft, and Google Cloud captured 31%, 25% and 11% of the global market in 2025, leaving Alibaba competing for remaining market share internationally.
Tariff Impact Analysis
Potential impacts include:
- E-commerce Effects – Higher tariffs on Chinese goods could reduce demand for products sold through Alibaba’s international platforms like AliExpress. This could affect cross-border transaction volumes and merchant activity.
- Cloud Services – While cloud services are less directly affected by physical goods tariffs, trade tensions could limit Alibaba
- Cloud’s expansion into Western markets. This would be especially true in sensitive sectors like government and defense.
- Investment Flows – Trade tensions typically reduce foreign investment in Chinese tech stocks, potentially suppressing Alibaba’s valuation regardless of operational performance.
- Supply Chain Disruption – Tariffs could force restructuring of merchant supply chains on Alibaba’s platforms, potentially reducing transaction volumes during transition periods.
Key Factors Moving Forward
Several elements will determine Alibaba’s stock direction:
- Regulatory – Continued Chinese government oversight remains a persistent concern, especially to overseas investors who are less familiar and tend to be more skeptical of China’s governance system. It’s a big driver of why Chinese companies tend to trade at around a ~40% discount to US companies looking at earnings multiples.
- AI Integration – Success in leveraging AI across e-commerce and cloud services.
- International Expansion – Ability to grow market share outside China despite geopolitical headwinds.
- Competition Management – Defending domestic market share while expanding globally.
- Valuation Recovery – Current undervaluation suggests potential upside if operational metrics improve.
The stock’s future largely depends on balancing domestic market defense with international growth, while navigating ongoing regulatory and geopolitical challenges.
The valuation discount suggests potential upside if these challenges are successfully managed.