You might have to travel far to find your next $1,000 investment, but I promise you won't need a travel visa. Alibaba (BABA 0.16%) does most of its business at the other end of the globe, but the Chinese e-commerce pioneer could be a great growth stock for stateside investors.
With the company about to check in with fresh financials -- it reports Tuesday morning before the U.S. market opens -- it's a good time to get up to speed with Alibaba. Let's take a closer look to see why it could be the ultimate growth stock to buy with $1,000 right now.
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Playing with house money
Alibaba is uniquely positioned among tech companies. As many players are financing bets in artificial intelligence (AI) and other next-gen growth opportunities through secondary offerings or taking on debt, Alibaba's money machine is already inside the house.
The heart of Alibaba's business is its business-to-consumer e-commerce platform Tmall and its consumer-to-consumer marketplace Taobao. Those two businesses combined produce 45% of Alibaba's consolidated revenue in the fiscal year 2025 that ended in March, but they also generated 113% of its consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
The dynamic duo -- combining for a jaw-dropping 44% adjusted EBITDA margin -- is covering Alibaba's efforts in international e-commerce (you may be familiar with AliExpress), the development of AI chips (a business that's ready to benefit from trade restrictions between China and U.S. semiconductor companies), and other long-term investments.
I didn't lump Alibaba's fast-growing Cloud Intelligence hosting business into the last group. It is part of that 55% of the parent company, but it's actually generating positive adjusted EBITDA. Oh, and it gets better.
There's still money to go around after investing in future growth as its e-commerce workhorses meander through a ho-hum economy. Alibaba returns money to its shareholders in the form of a modest dividend and a steady diet of share buybacks. Since picking up the pace on stock repurchases in fiscal 2022, Alibaba has bought back its stock in at least 14 consecutive quarters. It has already announced that it invested $241 million in repurchases for the fiscal second quarter, which it will discuss later this week.
In a world where AI-minded leaders are bloating their balance sheets, Alibaba's packing roughly twice as much cash and short-term investments as it does long-term debt. With share counts elsewhere ballooning, Alibaba's diluted shares outstanding are declining for the fifth year in a row.
NYSE: BABA
Key Data Points
Ready for whatever comes next
This has been an earnings season with plenty of twists and turns, and Alibaba bringing up the rear with its financial update on Tuesday will make some investors nervous. Analysts are bracing for a slide in profitability on a mere 3% year-over-year uptick in consolidated revenue.
It's not pretty, but keep in mind that the market already expects this to be a rough quarter. The outlook can improve if any of its costly side quests -- particularly on the AI front as China looks to fill the trade-war void on chips with domestic producers -- show signs of life in the report.
In the meantime, Alibaba is cheaper than you think. Despite having less than half of the company generating more than all of its profitability, Alibaba is trading for less than 16 times what analysts see it earning in the fiscal year that starts in April 2026. And those same Wall Street pros see revenue growth accelerating in the next fiscal year, with the bottom line bouncing back even faster.
Alibaba was even cheaper at the start of this year. The stock has soared 80% over the past year, but it has retreated 20% from its early October highs. You have time to dive into your own due diligence. No matter which way the stock moves following Tuesday's report, this is a growth tale with a long tail. Be patient, but pay attention. Alibaba is different in a good way.
