Alibaba (BABA) forecast
Alibaba has a similar profile to "Magnificent Seven" stocks, but it trades at a valuation discount because of its recent challenges, because it's based in China, and because it's still growing slowly. Also, the Chinese economy never fully recovered from the COVID-19 pandemic, and consumer spending has remained weak.
In its most recent earnings report, from the quarter ended September 2025, the company reported revenue growth of 15% to $34.8 billion when adjusted for the sale of Sun Art and Intime, showing that growth has accelerated from previous quarters. Adjusted earnings before interest, taxes, and amortization (EBITA) were down sharply due to investments in e-commerce and technology.
The stock also popped in January on news that the Chinese government could rein in price subsidies in the hypercompetitive food delivery industry. That underscores one of the three main factors that will impact the stock in the coming years.
Those are: Growth in the core e-commerce business and the health of the Chinese economy, Beijing's approach to regulation, which can make or break the entire Chinese sector, and its ability to compete in AI and its future investments in new technology.
On that note, let's take a look at where Alibaba stock might be in one year and in five years.
2026 forecast
Unlike U.S. companies, Alibaba doesn't give guidance, so making even near-term predictions can be difficult. However, we can use market sentiment and the company's recent results to get a sense of its direction.
Based on results in its most recent quarter, the company seems to be executing in most of its key verticals. In its China e-commerce division, which makes up more than half of its total revenue, revenue rose 16% to $18.6 billion. In cloud intelligence, the other key vertical investors are watching, revenue increased 34% to $5.6 billion, and investors were delighted with its plans to expand its AI capacity. It's also struck a deal with Nvidia (NVDA -2.57%), and trade policy around U.S. chip exports will also be key to the company's future, though that's hard to predict. Additionally, Beijing has taken a more favorable stance towards the tech sector since it believes it's crucial for China to be competitive in the new technology.
Alibaba now trades at a price-to-earnings (P/E) ratio of 22, which is more expensive than it was in recent years but also cheaper than most of the "Magnificent Seven" stocks.
Overall, the stock is in a position to modestly outperform the S&P 500 this year based on steady growth in the e-commerce businesses, what's likely to be another strong year for AI, cooling tensions with Beijing, and a reasonable valuation.
Wall Street analysts have set an average price target of $203 on the stock, implying a 22% upside on the stock. Thirteen out of 14 analysts covering the stock rate it a buy.
