Key Takeaways
- JPMorgan lowered its Alibaba price target from $210 to $200 while maintaining its Overweight rating, implying approximately 81% upside from the October 12 share price.
- Alibaba stock closed roughly 38% below its October 2025 high as weaker earnings and substantial investments weighed on investor sentiment.
- Alibaba’s cloud revenue grew 45% in the June quarter, while analysts anticipate a significant earnings recovery through fiscal 2028.
- JPMorgan’s $200 target is possible, but it requires a meaningful earnings recovery. Alibaba’s current valuation offers a more compelling case than assuming the stock will reach $200.
Alibaba Group Holding (BABA) has fallen sharply from its 2025 highs, but JPMorgan still sees substantial upside for the Chinese technology giant.
On October 12, JPMorgan analyst Alex Yao lowered his Alibaba price target from $210 to $200 while maintaining an Overweight rating. Based on the stock’s price of approximately $110.80 at the time, the revised target implied roughly 81% upside.
The bullish outlook comes despite Alibaba closing October 9 approximately 38% below its October 29, 2025 closing high of $179.97, according to TIKR historical price data.
For investors, the key question is whether Alibaba’s expanding AI and cloud businesses can generate enough earnings growth to support JPMorgan’s ambitious valuation.
Alibaba’s Profits Have Taken a Hit
Alibaba’s profitability has weakened significantly as the company increases investment in AI infrastructure and quick commerce.
According to TIKR data, normalized earnings per ADS declined from RMB 65.41 in fiscal 2025 to RMB 26.80 in fiscal 2026, representing a decline of approximately 59%.
The company’s June-quarter earnings results highlighted the financial pressure from its expansion strategy.
Revenue increased 9% year over year, while adjusted EBITA declined 30%, adjusted EBITDA fell 14%, and net income dropped approximately 75%.
Free cash flow was an outflow of RMB 44.7 billion, compared with an outflow of RMB 18.8 billion a year earlier.
During Alibaba’s August 20 earnings call, CEO Eddie Wu explained the company’s investment strategy, stating, “Beginning in 2025, we began a heavy investment cycle in hardware.”
These investments could strengthen Alibaba’s position in AI and cloud computing, but investors still need evidence that higher spending will translate into sustainable earnings growth.
Alibaba’s AI Cloud Business Is Driving the Bull Case
Alibaba’s rapidly expanding cloud business remains one of the strongest arguments supporting a potential stock recovery.
According to Alibaba’s official June-quarter results, revenue from AI Cloud and Compute Services increased 45% year over year, reflecting growing demand for artificial intelligence infrastructure and related services.
The company also reported triple-digit growth in AI-related product revenue for the twelfth consecutive quarter.
In Alibaba’s August 20 earnings announcement, CFO Toby Xu highlighted improving cloud profitability as revenue growth accelerated and the segment’s adjusted EBITA margin reached approximately 12%.
According to an October 8 South China Morning Post report, analysts expect Alibaba’s cloud and AI revenue growth could exceed 50% in the September quarter.
Bank of America has also expressed optimism about Alibaba’s earnings outlook.
Analyst Joyce Ju raised her price target to $178, arguing that the market may be underestimating the company’s potential earnings recovery.
For shareholders, sustained cloud growth could support higher earnings over time, particularly if Alibaba begins generating stronger returns from its AI infrastructure investments.
However, revenue growth alone will not be enough. Improving operating profitability and free cash flow will be equally important.
Does JPMorgan’s $200 Alibaba Price Target Make Sense?
Wall Street remains optimistic about Alibaba despite the stock’s substantial decline.
According to TIKR’s October 9 data, the consensus price target from 39 analysts stood at approximately $186, representing nearly 67% upside from the stock’s $111.37 closing price.
Interestingly, the consensus target was approximately $186 at the end of September 2025, when Alibaba traded at $178.73.
That suggests Wall Street’s collective price expectations have remained relatively stable even as Alibaba’s share price has declined significantly.
The TIKR chart above presents analysts’ consensus price targets in Chinese yuan (CN¥), while the approximately $186 consensus target discussed earlier refers to Alibaba’s US-listed shares in dollars. Because the chart uses a different currency and potentially a different share basis, the figures are not directly comparable. However, the chart provides additional context on how analysts’ price expectations have changed over the past year.
Whether Alibaba can reach Wall Street’s price targets ultimately depends on its earnings recovery and valuation.
According to TIKR valuation data, Alibaba traded at approximately 14 times forward earnings on October 9, close to its five-year average of roughly 13 times.
That suggests the stock was trading near its historical valuation rather than at an unusually expensive premium.
JPMorgan’s $200 target would imply a significantly higher valuation based on Alibaba’s forward earnings at the time.
Using the October 9 closing price of $111.37 and its forward P/E of approximately 13.95x, Alibaba’s implied next-twelve-month earnings were about $7.98 per ADS.
At those earnings, a $200 share price would represent approximately 25 times forward earnings, near Alibaba’s five-year peak multiple of 25.3x.
That makes the target difficult to justify using the earnings outlook at the time alone.
Nevertheless, Wall Street anticipates a substantial earnings recovery.
According to TIKR consensus estimates, Alibaba’s normalized EPS is expected to increase from RMB 26.80 in fiscal 2026 to RMB 44.35 in fiscal 2027 and RMB 62.15 in fiscal 2028.
If Alibaba delivers that projected earnings recovery, the valuation multiple required to support a $200 share price would become more reasonable as higher earnings enter forward estimates.
The important distinction is that JPMorgan’s target depends not only on optimism about AI but also on Alibaba’s ability to translate growth into substantially higher profits.
Is Alibaba Stock Undervalued After Its Sell-Off?
Alibaba appears attractively valued if its earnings recover as analysts expect, but JPMorgan’s $200 price target remains an aggressive scenario rather than the most reasonable near-term expectation.
At approximately 14 times forward earnings in the October 9 snapshot, Alibaba was trading close to its five-year average valuation despite having a cloud business growing considerably faster than the company overall.
That combination provides a credible argument for upside.
Still, Alibaba faces meaningful risks, including continued spending on AI infrastructure, intense competition in Chinese e-commerce, and uncertain profitability in quick commerce.
According to Reuters’ coverage of Alibaba’s August earnings, management expects its quick-commerce operations to achieve overall profitability by fiscal 2029, suggesting some financial pressure could persist.
The next important test will be Alibaba’s September-quarter earnings report.
If cloud growth accelerates toward 50% while cash outflows begin narrowing, investors will have stronger evidence that the investment cycle is starting to deliver financial returns.
Ultimately, Alibaba does not need to reach $200 to offer investors meaningful upside. Its more compelling opportunity lies in recovering earnings while maintaining a reasonable valuation. JPMorgan’s target becomes more realistic if that earnings recovery materializes.
So what is Alibaba stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
