Alibaba (NYSE:BABA): Evaluating Valuation After Qwen-3-Max AI Model and New Chip Unveil

Alibaba Group Holding (NYSE:BABA) just made a splash with the introduction of its Qwen-3-Max AI model, boasting over a trillion parameters, and an announcement of a new AI chip to compete with some of the world’s biggest names in the sector. If you’re weighing what to do with your Alibaba shares, this surge of innovation is worth your attention. The company's recent moves underscore its commitment to staying at the forefront of artificial intelligence, with leadership positioning squarely aimed at rivals like OpenAI and Nvidia. These actions also support China’s focus on tech self-sufficiency.

The impact on Alibaba’s share price has been immediate, with a 3.2% climb in pre-market trading following these announcements. This is the latest in a series of signals that have fueled strong sentiment, reflecting both short-term excitement and optimism for Alibaba’s sector leadership in generative AI. Over the year, momentum has been building, with the stock delivering a gain of 72% and outpacing many regional competitors, though Alibaba still faces an environment marked by competition and regulatory overhangs. Recent updates, such as solid first quarter earnings and expansion in health tech, only add context to this performance.

With shares trending upward and fresh AI ambitions on display, the question is whether Alibaba is genuinely undervalued after recent moves or if investors are already pricing in all that future potential.

Most Popular Narrative: 34.4% Overvalued

The most followed valuation narrative for Alibaba signals caution, suggesting the current share price reflects more optimism than justified by underlying fundamentals.

While Alibaba shows strong operational momentum, particularly in AI and cloud services, the current stock price appears to fully reflect near-term growth prospects given macro headwinds and geopolitical risks. In the end I put my doubt, why has Michael Burry sold all?

Think Alibaba’s future growth story is unstoppable? This narrative’s calculations are built on aggressive assumptions about profit streams and future expansion you might not expect. Want to uncover which financial levers could justify today’s price, and what metric has triggered caution among serious investors? Take a closer look beneath the surface. Details here might change how you value bold tech bets.

Result: Fair Value of $107.09 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected regulatory action or intensified US-China trade tensions could quickly alter the outlook and challenge current assumptions supporting Alibaba’s valuation.

Find out about the key risks to this Alibaba Group Holding narrative.

Another View: Multiples Point to Value

Taking a step back, our other valuation lens compares Alibaba’s current share price to earnings in its wider industry. This time, the story is different, with signs the stock actually trades at a discount. Which view deserves more weight? Should investors consider model calculations or the market's own benchmark?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Alibaba Group Holding to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Alibaba Group Holding Narrative

If you see Alibaba’s outlook differently or want to dig into the numbers yourself, it’s quick and simple to build your own narrative. This process often takes less than three minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Alibaba Group Holding.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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