Alibaba AI Spending Rally: Why the Stock Could Climb Even Higher
Alibaba (BABA) shares jumped 10% after the company announced new AI spending, overseas data centers, and the unveiling of Qwen3-Max, its trillion-parameter AI language model.
The Alibaba AI spending rally is boosting investor sentiment — and the stock could still have room to run.
Why the stock is soaring
- AI catalyst: Launch of Qwen3-Max, Alibaba’s largest model to date, positions the company to compete globally in generative AI.
- Global expansion: New data centers abroad increase scale and cloud competitiveness.
- Nvidia partnership: Integration of Nvidia tools into robotics and self-driving AI further validates its growth path.
Shares have nearly doubled in 2025, climbing over 35% in just the last month and reaching levels not seen since 2021.
Wall Street’s stance
Analysts remain generally positive, with Alibaba carrying a consensus “Buy” rating from over 50 analysts and no “Sell” calls.
Current targets cluster around $167–$179, but upside revisions could follow given the latest momentum in AI.
- Nomura: Buy, $170 target, citing improving retail unit efficiency and narrowing per-order losses.
- Morningstar: Hold, $179 target, citing undervalued AI cloud potential and management execution.
- U.S. Tiger Securities: Buy, $145 target, emphasizing Jack Ma’s return as a sentiment driver.
Key drivers of the Alibaba AI spending rally
- Retail recovery: Quick-commerce brand investments set to halve per-order losses by October.
- AI demand: New opportunities emerging from education, healthcare, and enterprise AI training.
- Leadership factor: Jack Ma’s informal return boosts confidence with employees, investors, and potentially Beijing regulators.
Risks to watch
- Regulation: Beijing’s antitrust crackdowns could return, impacting revenue and margins.
- U.S. Compliance: ADR Disclosure Rules Add Uncertainty for Overseas Investors.
- Valuation risk: At ~18x forward earnings, Alibaba trades below S&P tech peers, but sentiment could shift quickly.
Bottom line
The Alibaba AI spending rally reflects both a turnaround in fundamentals and improving sentiment around Chinese tech.
With AI expansion, Nvidia partnerships, and Jack Ma’s renewed influence, Alibaba could continue climbing — though regulatory and geopolitical risks remain wildcards.