Key Takeaways
- Alibaba shares have declined more than 7% in 2026, with the stock valued at 16x forward earnings versus a 10-year average of 19x
- The company reports fiscal Q3 results on March 19, with projected EPS of $1.67 (down 43% YoY) and revenue of $42.1 billion
- Morgan Stanley elevated BABA to its premier China technology selection, displacing Tencent from the top spot
- Mizuho analysts established a $195 target price, while sum-of-the-parts analysis indicates potential value of $213
- Morgan Stanley projects China’s AI chip market will expand to $67 billion by 2030, with domestic production reaching 76% self-sufficiency
The e-commerce giant has experienced a challenging beginning to 2026. Shares have tumbled over 7% since the year started, pressured by anxiety surrounding artificial intelligence rivalry, uncertainty about corporate strategy decisions, and wider apprehensions regarding Chinese consumer expenditure patterns.
Alibaba Group Holding Limited, BABA
However, an increasing number of Wall Street professionals believe the market has overreacted to the downside.
The equity currently commands a 16x multiple on forward earnings projections. This represents a discount to its decade-long average of 19x and sits substantially below Amazon, which trades around 26.5x. According to Barron’s, technical indicators suggest the stock has entered oversold territory.
The company is scheduled to release fiscal third-quarter results on March 19. Wall Street consensus calls for earnings per share of $1.67, representing a 43% year-over-year decline, alongside revenue of $42.1 billion — reflecting 9% growth.
While the earnings contraction appears steep, the revenue expansion paints a more nuanced picture. Leadership will have the opportunity to directly address shareholder concerns during the earnings conference call.
Among the most significant uncertainties is Alibaba’s Qwen AI division. Recent media reports have highlighted management restructuring and executive exits within that unit, sparking worries about internal conflicts regarding artificial intelligence strategy.
Citigroup’s analyst Alicia Yap acknowledged these developments. However, she also emphasized that Qwen experienced robust order volumes during the Chinese Lunar New Year period, serving as a critical demand indicator.
Qwen has been embedded throughout Alibaba’s primary consumer ecosystems — including Tmall, Taobao, Freshippo, and Alipay. This represents substantial distribution reach for an AI-powered offering.
Cloud Division Remains Underappreciated
Mizuho’s analyst Wei Fang contends that Alibaba’s cloud computing segment is being discounted by market participants. She characterizes the organization’s underlying fundamentals as “progressively stronger, propelled by AI-driven acceleration.”
Fang describes Alibaba’s cloud infrastructure as unmatched within China. The business unit competes head-to-head with Amazon Web Services, Google Cloud, and Microsoft Azure.
Her formal price objective stands at $195 per share — representing 43% appreciation from current trading levels. A comprehensive sum-of-the-parts valuation suggests even greater potential worth at $213 per share, with e-commerce and cloud operations contributing the majority.
She further observes that Alibaba’s additional business segments, combined with its cash reserves and investment portfolio, independently justify approximately $25 per share.
Morgan Stanley Elevates to Premier Position
Morgan Stanley took a more decisive stance this week, designating Alibaba as its foremost investment recommendation within China’s technology sector — dethroning Tencent from that position.
The investment bank emphasized Alibaba’s comprehensive command across the complete AI technology stack: semiconductor chips, cloud infrastructure platforms, foundational language models, and consumer-oriented applications.
Regarding AI semiconductors specifically, Morgan Stanley asserts that Alibaba’s internally-developed chips rank among the industry’s finest. They position the company as China’s preeminent and the globe’s fourth-largest cloud infrastructure operator.
The bank additionally highlights Alibaba’s open-source AI model ecosystem, which has achieved extensive worldwide implementation.
Projecting forward, Morgan Stanley anticipates the total addressable market for AI chips within China will climb to $67 billion by 2030. Their research suggests domestic self-reliance in AI chip manufacturing will achieve 76% by that timeframe.
Alibaba’s earnings announcement is scheduled for March 19.
