Alibaba stock has potential for upside despite recent challenges in the e-commerce segment

From Nasdaq: 2025-01-08 04:55:00

Alibaba (NYSE: BABA) and Amazon (NASDAQ: AMZN) have seen diverging stock performance in the past decade, with Amazon up over 1,400% while Alibaba is down more than 15%. However, Alibaba’s operational growth has been solid, with revenue increasing over 10 times from $12.3 billion in 2015 to $130.3 billion in 2024.

Alibaba, often dubbed the Amazon of China, operates in e-commerce, logistics, and cloud computing. Its e-commerce segment has faced challenges, with revenue growth slowing to just 1% last quarter. However, initiatives like new software service fees and AI-powered tools aim to reignite growth.

Alibaba’s cloud computing business is growing, with revenue up 7% last quarter. The company is investing in AI-related products and services, despite competition. Valuation-wise, Alibaba is trading at a forward P/E ratio of less than 9 times, making it an attractive investment with potential upside.

Big investors like David Tepper are bullish on Alibaba due to its low valuation and cash reserves. The company’s focus on improving its e-commerce and cloud businesses, along with government stimulus in China, could boost its stock. While not a guaranteed life-changing investment, Alibaba has potential for solid upside.



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