Key Takeaways
- Alibaba shares have declined more than 7% in 2026, currently valued at 16x forward earnings — beneath its decade-long average of 19x
- The company reports quarterly results on March 19, with analysts projecting EPS of $1.67, representing a 43% year-over-year decline, alongside revenue of $42.1 billion
- Morgan Stanley has elevated BABA to its premier China technology selection, displacing Tencent from that position
- Mizuho maintains a $195 price objective for BABA, while sum-of-parts analysis indicates potential value reaching $213
- Morgan Stanley projects China’s AI chip market will expand to $67 billion by 2030, achieving 76% domestic production capability
The year 2026 has started on a challenging note for Alibaba. Shares have tumbled over 7% since January, pressured by competitive threats in artificial intelligence, uncertainty surrounding corporate strategy shifts, and ongoing worries about consumer demand in China.
Alibaba Group Holding Limited, BABA
However, an increasing contingent of Wall Street professionals believes the market has overreacted with this decline.
The company’s shares currently command a 16x multiple on forward earnings projections. This valuation sits below its historical 10-year average of 19x and substantially trails Amazon, which trades around 26.5x. Barron’s has observed that the stock appears technically oversold based on chart patterns.
Alibaba is scheduled to release its third fiscal quarter results on March 19. The Street consensus calls for earnings per share of $1.67, marking a 43% year-over-year contraction, while revenue is anticipated at $42.1 billion — representing 9% growth.
While the earnings decline appears steep, the revenue trajectory paints a more optimistic picture. Company leadership will have an opportunity to directly confront investor anxieties during the earnings conference call.
Among the most significant uncertainties is the status of Alibaba’s Qwen AI division. Recent reports have surfaced regarding management restructuring and executive exits within that unit, sparking speculation about potential disagreements regarding AI strategic direction.
Citigroup’s Alicia Yap acknowledged these reports in her analysis. However, she simultaneously highlighted that Qwen experienced robust order volumes throughout the Chinese Lunar New Year period, serving as an important demand indicator.
Qwen has been deployed throughout Alibaba’s flagship consumer properties — Tmall, Taobao, Freshippo, and Alipay. This represents substantial distribution reach for an artificial intelligence solution.
Cloud Division Remains Underappreciated
Mizuho’s Wei Fang contends that Alibaba’s cloud infrastructure business isn’t receiving appropriate recognition from investors. She characterizes the company’s operational foundation as “progressively stronger, propelled by AI-driven acceleration.”
Fang positions Alibaba’s cloud capabilities as China’s most formidable. This segment directly challenges Amazon Web Services, Google Cloud, and Microsoft Azure in the marketplace.
Her stated price objective stands at $195 per share — representing 43% appreciation from present trading levels. Alternative sum-of-parts valuation methodology suggests even greater potential worth at $213 per share, with substantial contributions from both e-commerce and cloud operations.
She further observes that Alibaba’s additional business segments, combined with its cash reserves and investment holdings, contribute approximately $25 per share in standalone value.
Morgan Stanley Designates It As Premier Selection
Morgan Stanley took a more aggressive stance this week, designating Alibaba as its preferred investment opportunity within Chinese technology — supplanting Tencent from that designation.
The financial institution emphasized Alibaba’s comprehensive capabilities spanning the entire AI ecosystem: semiconductor technology, cloud infrastructure, foundational AI models, and consumer-facing implementations.
Regarding AI semiconductors particularly, Morgan Stanley asserts that Alibaba’s proprietary chip designs represent top-tier technology. They position the company as China’s foremost and the globe’s fourth-largest cloud infrastructure operator.
The firm additionally references Alibaba’s open-source AI model initiatives, which have achieved substantial international adoption.
Projecting forward, Morgan Stanley estimates the total addressable market for AI chips within China will reach $67 billion by decade’s end. They anticipate domestic self-reliance in AI semiconductor manufacturing will achieve 76% by that timeframe.
Alibaba’s earnings release is scheduled for March 19.
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