Key Stats for Alibaba Stock
- Past-Week Performance: -0.8%
- 52-Week Range: $96 to $193
- Current Price: $154
What Happened to Alibaba Stock?
Alibaba (BABA) stock closed and fell to $117 last Friday, roughly 39% below its 52-week high of $193, as three separate regulatory actions landed within the same week: China summoned Alibaba over pricing practices, its Fliggy travel platform faced scrutiny over consumer lending, and the Pentagon briefly added the company to its list of firms allegedly aiding China’s military before withdrawing the notice within an hour on February 14.
The Pentagon’s 1260H list addition triggered immediate concern, as inclusion signals to U.S. government suppliers the military’s negative opinion of listed firms, and a new law will eventually bar the Pentagon from contracting with companies on it.
China’s central bank and financial regulators simultaneously summoned Alibaba’s Fliggy platform and five other travel sites, demanding they standardize marketing and disclose all lending institutions and product details to consumers.
Nevertheless, competing institutional signals complicated the bearish narrative, as Third Point disclosed a fresh stake of 825,000 Alibaba sponsored ADRs as of December 31, even as Coatue Management fully dissolved its Alibaba position during the same quarter.
Countering the regulatory pressure, Alibaba launched Qwen 3.5 on February 16, an agentic AI model it claims is 60% cheaper and 8 times more efficient than its predecessor, with benchmark results the company says surpass GPT-5.2, Claude Opus 4.5, and Gemini 3 Pro.
The broader picture suggests Alibaba is simultaneously navigating its most aggressive AI monetization push yet, having driven Qwen’s daily active users from 7 million to 58 million through a 3-billion-yuan coupon campaign, while managing escalating regulatory exposure on both sides of the U.S.-China divide.
Wall Street’s Take on BABA Stock
Despite the regulatory crossfire from both Washington and Beijing landing simultaneously in mid-February, Alibaba’s Qwen 3.5 launch and its agentic AI monetization push position the company at the center of the fastest-growing segment in global tech.
Yet the fundamentals tell a more cautious story, as analysts project fiscal year 2026 revenue of 1,039.7 billion yuan or $150.45 billion, just 4.4% growth year over year, while EBITDA margins are forecast to compress sharply from 20.3% to 13.8% and net income is expected to fall 37.5%.
Still, Wall Street remains broadly constructive, with 30 buy ratings and 8 outperform ratings among 42 analysts as of February 20, and a mean price target of $198 implying roughly 28% upside from the current close of $154.
The target spread, however, reflects deep uncertainty, ranging from a low of ¥871 ($126) to a high of ¥1,799 ($260), signaling that analysts are sharply divided on how Alibaba resolves its AI investment cycle against margin headwinds and geopolitical risk.
What Does the Valuation Model Say?
Against that backdrop, a mid-case valuation model prices BABA at $197, projecting a 27.5% total return over 4.1 years at a 6.1% annualized IRR, a relatively modest payoff given the scale of regulatory and macro risks Alibaba is actively navigating.
The most concrete near-term risk is margin compression, with EBIT forecast to collapse 38.3% in fiscal 2026 and EPS normalized expected to drop 33.2%, suggesting Alibaba’s AI spending is eroding profitability faster than revenue growth can absorb it.
At $154.45 and trading at a steep discount to both analyst consensus and its own valuation model target, Alibaba looks undervalued on paper, but the convergence of dual regulatory pressure, deteriorating margins, and institutional exits like Coatue’s full stake dissolution makes this a high-conviction story only for investors with patience for a multi-year recovery.
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