Alibaba (BABA +8.10%), the largest e-commerce and cloud company in China, went public at $68 per share on Sept. 18, 2014. It raised $25 billion, making it the largest IPO in history at the time, and it held that record until Saudi Aramco's $29.4 billion IPO in 2019.
Alibaba's stock closed at a record high of $310.29 on Oct. 27, 2020. That marked a 356% gain from its IPO price. At the time, investors were dazzled by the robust growth of its e-commerce and cloud businesses, as well as its rapid expansion into adjacent markets.
Image source: Getty Images.
But today, Alibaba's stock trades at about $114. China's antitrust regulators cracked down on Alibaba's e-commerce business by forcing it to ax exclusive deals with merchants, rein in its promotions, and seek regulatory approvals for all its future investments and acquisitions. All of that pressure, along with a record $2.8 billion fine, eroded its defenses against aggressive competitors including PDD and JD.com.
At the same time, China's soft economic growth forced many companies to rein in their cloud spending. Alibaba also scrapped a long-awaited IPO for its fintech affiliate Ant Financial in 2020, and it also walked back plans to spin off cloud, logistics, and Freshippo grocery units in 2023 and 2024. Investors sensed its high-growth days were over, and its stock stumbled. Those setbacks were worrisome, but can Alibaba's stock bounce back over the next 10 years?
NYSE: BABA
Key Data Points
What are Alibaba's core growth engines?
Alibaba splits its business into seven groups. The Taobao and Tmall Group hosts its two largest online marketplaces in China, the Alibaba International Digital Commerce Group handles its overseas and cross-border e-commerce marketplaces (including Lazada in Southeast Asia, Daraz in South Asia, Trendyol in Turkey, and AliExpress for its overseas customers), and the Cloud Intelligence segment houses its cloud infrastructure platform and related AI services.
Alibaba's Cainiao group provides both first-party and third-party logistics services, its Local Services group provides localized delivery services within China, and its Digital Media and Entertainment Group handles streaming video, audio, and film production businesses. Lastly, the "All Others" segment operates the company's brick-and-mortar stores and non-core digital platforms.
In fiscal 2025, which ended this March, Alibaba's revenue rose 6%. All seven of its groups grew year over year, while its international digital commerce, cloud intelligence, and local services groups posted double-digit revenue gains.
|
Segment |
FY 2025 Revenue (USD) |
Growth (YOY in CNY) |
|---|---|---|
|
Taobao and Tmall Group |
$61.99 billion |
3% |
|
Alibaba International Digital Commerce Group |
$18.23 billion |
29% |
|
Cloud Intelligence Group |
$16.27 billion |
11% |
|
Cainiao Smart Logistics Group |
$13.96 billion |
2% |
|
Local Services Group |
$9.24 billion |
12% |
|
Digital Media and Entertainment Group |
$3.07 billion |
5% |
|
All others |
$28.43 billion |
7% |
|
Total |
$137.3 billion |
6% |
Data source: Alibaba. YOY = Year-over-year.
What are Alibaba's near-term catalysts?
Alibaba expects its overseas e-commerce marketplaces, cloud infrastructure platform, and ongoing upgrades for Qwen, a new family of large language models for new generative AI applications, to fuel its near-term growth. The company's AI-related revenue could surge over the next few years as more companies upgrade their AI capabilities.
As for its core Chinese e-commerce business, Alibaba plans to upgrade Taobao's live streaming features and peddle more discount goods to keep up with PDD and ByteDance's Douyin, known as TikTok overseas, as the macro headwinds curb consumer spending. This segment won't become a roaring growth engine again, but its stabilization is crucial for Alibaba's future. China's economy could also stabilize and grow again if it reaches a mutually favorable trade deal with the United States.
What are Alibaba's long-term catalysts?
Since Alibaba no longer plans to spin off most of its groups as independent companies, observers might see the company integrate its cloud, AI, logistics, delivery apps, and brick-and-mortar stores more deeply into domestic and overseas e-commerce marketplaces. It could also roll out more advertising and e-commerce services across its own digital media ecosystem -- which includes the streaming video platform Youku, its streaming music service AliMusic, and its AliOS smart TV platform.
In other words, Alibaba's high-growth days might be over, but its businesses could converge and drive growth as a diversified retail and tech giant.
According to Mordor Intelligence, the Chinese e-commerce market could still expand at a CAGR of 10% from 2025 to 2030. Grand View Research expects China's public cloud market to grow at a CAGR of 23% from 2024 to 2030. Staying at the top of these two markets, even as a maturing leader, could ensure its long-term growth.
Those secular trends indicate Alibaba still has plenty of room to grow, even if it faces challenging macro, competitive, and regulatory headwinds. Conservatively assuming it grows EPS at a CAGR of 10% from 2025 to 2035, and its stock still trades at 11 times forward earnings by the beginning of the final year, Alibaba's price could more than double to about $257 over the next decade. That would be a decent gain, but it would still be well below its all-time high from 2020.
