TLDR
- Alibaba shares have declined more than 7% in 2026, currently valued at 16x forward earnings — beneath the 10-year mean of 19x
- The company’s March 19 earnings release anticipates EPS of $1.67, reflecting a 43% year-over-year decrease, with revenues projected at $42.1 billion
- Morgan Stanley has elevated BABA to its premier China technology investment, displacing Tencent from that position
- Mizuho analysts project a $195 share price, while sum-of-the-parts analysis indicates potential appreciation to $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 proven challenging for Alibaba thus far. Shares have tumbled over 7% since January, pressured by competitive concerns in artificial intelligence, strategic uncertainties, and macroeconomic headwinds affecting Chinese consumer behavior.
Alibaba Group Holding Limited, BABA
Yet an increasing contingent of Wall Street professionals believes the market has overreacted to the downside.
The equity currently commands a multiple of 16 times forward earnings projections. This represents a discount compared to its decade-long average of 19x and a substantial gap versus Amazon trading near 26.5x. Barron’s observed that technical indicators suggest the stock has reached oversold territory.
The company’s fiscal third-quarter results are scheduled for release on March 19. Wall Street consensus points to earnings per share of $1.67, representing a 43% year-over-year contraction, while revenue is forecast at $42.1 billion — marking 9% growth.
While the earnings decline appears substantial, the revenue trajectory paints a more optimistic picture. Company leadership will have an opportunity to directly address shareholder concerns during the earnings conference call.
Among the most pressing uncertainties is the status of Alibaba’s Qwen AI division. Media reports have surfaced regarding leadership transitions and executive exits within the unit, sparking speculation about internal strategic disagreements surrounding AI development.
Citigroup analyst Alicia Yap acknowledged these developments. However, she emphasized that Qwen experienced robust order volumes throughout the Chinese Lunar New Year period, serving as an important demand indicator.
Qwen has achieved integration throughout Alibaba’s primary consumer platforms — including Tmall, Taobao, Freshippo, and Alipay. This represents substantial distribution reach for an artificial intelligence offering.
Cloud Business Getting Overlooked
Mizuho analyst Wei Fang contends that Alibaba’s cloud computing segment remains significantly undervalued by investors. She characterizes the company’s underlying business metrics as “incrementally healthier, driven by AI-accelerated growth.”
Fang identifies Alibaba’s cloud infrastructure as China’s premier offering. The segment competes head-to-head with Amazon Web Services, Google Cloud, and Microsoft Azure in the global marketplace.
Her published price objective stands at $195 per share — representing 43% appreciation from present trading levels. Alternative sum-of-the-parts valuation methodology suggests even greater potential value of $213 per share, with e-commerce and cloud operations contributing the largest components.
She further observes that Alibaba’s supplementary business segments, combined with cash holdings and investment portfolio, independently justify approximately $25 per share in value.
Morgan Stanley Makes It a Top Pick
Morgan Stanley advanced the narrative further this week by designating Alibaba as its premier investment opportunity within China’s technology sector — supplanting Tencent in that designation.
The investment bank emphasized Alibaba’s comprehensive positioning throughout the complete AI technology stack: semiconductor chips, cloud computing infrastructure, foundational AI models, and consumer applications.
Regarding AI semiconductors specifically, Morgan Stanley credits Alibaba’s internally developed chips as industry-leading. They rank the organization as China’s dominant cloud provider and the world’s fourth-largest infrastructure operator.
The firm additionally highlights Alibaba’s open-source artificial intelligence models, which have achieved substantial international adoption.
Projecting forward, Morgan Stanley anticipates the total addressable market for AI chips within China will surge to $67 billion by decade’s end. Their analysis forecasts domestic AI chip production self-sufficiency will reach 76% by 2030.
Alibaba’s earnings report is scheduled for March 19.
