Alibaba Stock: What's Really Going On With Its Price?
Alibaba's AI Gambit: Genius Play or Just Another Distraction?
Let's be real for a second. You hear "Alibaba stock up 89% year-to-date," "AI chatbot app hits 10 million downloads in a week," and suddenly everyone's dusting off their bullish hats. The buzz around Alibaba's Qwen app, rebranded and relaunched like it’s the second coming of the internet, had the stock jumping. Analysts are practically tripping over themselves, calling it "one of the fastest-growing AI applications to date," even hinting at it becoming "China's WeChat for the AI era." It’s a narrative so shiny, so perfectly timed, you almost want to believe it. Almost.
But here’s the thing about shiny objects: they’re often just that—objects meant to distract. Is this whole AI push a genius stroke of strategic brilliance from Alibaba, or is it just another corporate magician's trick, trying to divert our eyes from the real story playing out behind the curtain? My gut says the latter, and honestly... it's not even a subtle trick.
The AI Mirage: Chasing the Next Big Thing (and What It Costs)
Look, I get it. AI is the new black. Everyone wants a piece. Alibaba's pouring cash into it – we’re talking roughly $53 billion over three years, a number their CEO Eddie Wu already says they’ll exceed because "demand exceeded expectations." That’s a bold claim, especially when you’re talking about infrastructure for AI and cloud computing. And yeah, their cloud business is showing strong momentum, with revenue up 34% year-over-year, and AI-related revenue seeing triple-digit growth for nine straight quarters. Enterprise customers are apparently eating up Alibaba's AI tools, and the company's own AI workloads are beefing up the numbers. It all sounds great on paper, doesn't it? Like they've finally found their `nvidia stock` moment.
But let's peel back a layer. This isn't free money. Alibaba's Q2 FY26 earnings report, the one where revenue beat expectations at 247.8 billion yuan, also dropped a less convenient truth: adjusted diluted EPS was 4.36 yuan, below the 6.34 yuan consensus. And guess what else? Cash flow declined. Why? Because Alibaba increased spending on AI, cloud, and quick commerce. So, they’re bleeding cash to chase this AI dream. Is that a "genius play" when it hits your bottom line now, or is it just a massive gamble with your investors' money? Are we really supposed to believe that rebranding an app and hitting 10 million downloads – a number that could easily be inflated by pre-installs or forced updates, by the way – is a definitive sign of market dominance when the actual financial impact is a cash flow decline? Give me a break.
The Shell Game: Shifting Losses and Softening Core Business
This brings us to the other "improving" numbers that analysts like Bank of America's Joyce Ju are clinging to. She reaffirmed a "Buy" rating on `baba stock price`, which is wild, considering she also cut the price target from $200 to $188. Think about that for a second. "Yeah, we still think it's good, but not as good, and oh, by the way, we're shaving off twelve bucks from what we thought it was worth." That’s not exactly a ringing endorsement, is it? That's the financial equivalent of saying, "Yeah, she's a great date, but I wouldn't marry her."
Her reasoning? "Softer near-term growth in e-commerce." Ding, ding, ding! There it is. The core of Alibaba's empire, its main shopping business, is slowing down. She expects customer management revenue (CMR) – basically, merchant ads and fees – to slow as earlier pricing benefits fade. And as a direct result, she reduced her earnings forecasts by 7% to 20% through FY28. That ain't a short-term blip; that's a multi-year forecast reduction on your bread-and-butter business.
Then there's the quick commerce side: fast grocery and delivery. Ju says "trends are moving in the right direction." The division reported a 36-37 billion yuan loss, but hey, it was better than expected! And the loss per order has "narrowed to about 5 yuan." Management says losses should drop by at least half. This is like celebrating that your leaky boat is only taking on half as much water as before. You're still sinking, just slower. It’s a shell game, shifting the focus from the colossal losses to the rate of those losses improving. This ain't a genius play. No, 'ain't' is too soft—it's a desperate gamble to keep the narrative afloat while the underlying `alibaba stock` fundamentals are getting chipped away. And if you needed more proof, the stock was actually down 2.3% on Tuesday, the very day after the big AI app download news. The market ain't always fooled by the hype, even if analysts are.
What Are We Really Buying Into?
So, what are we left with? A company pouring billions into AI, which is hurting its short-term cash flow and EPS, while its core e-commerce business is expected to soften for years. Meanwhile, they're celebrating "improving" losses in quick commerce, which means they're still losing billions. All this, while analysts maintain a "Strong Buy" consensus and imply 25% upside potential. It feels like everyone's looking at the shiny new `ai` toy, hoping it'll magically fix everything, rather than facing the stark reality of the slowing engine under the hood. I'm just sitting here wondering if anyone actually believes this story, or if we're all just pretending because the alternative is too depressing... and anyone who tells you otherwise is probably selling something.