Alibaba (NYSE:BABA) Valuation in Focus as AI Breakthroughs and Global Expansion Drive Fresh Investor Interest

Alibaba Group Holding (NYSE:BABA) is making waves again as its flagship Qwen3-Max AI model has surpassed top U.S. and Chinese contenders. Meanwhile, its mapping arm, Amap, is pursuing global expansion and innovative new partnerships in autonomous vehicles.

See our latest analysis for Alibaba Group Holding.

Momentum has been building for Alibaba, as recent breakthroughs in AI and fresh global partnerships have caught the market’s attention. The shares have soared, with a 95.81% share price return year-to-date and a 40.21% gain over the past three months. However, the five-year total shareholder return remains negative. With the latest moves in AI and international expansion, investors see renewed potential.

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With Alibaba enjoying a remarkable run in 2025 and valuation metrics showing a significant discount to analyst targets, the question now is whether investors have an opportunity to buy into further upside or if the market is already factoring in future growth.

Most Popular Narrative: 55% Overvalued

Closing at $166.34, Alibaba’s stock sits well above the fair value of $107.09 calculated in the most widely followed narrative. According to StefanoF, the market’s optimism may outpace the company’s current 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. Just in the end I put my doubt, why has Michael Burry sold all?

Read the complete narrative.

Curious about the core engine behind this narrative? There is a sharp focus on earnings trends, cash flows, and the strategic bets driving growth. Uncover the behind-the-scenes calculations, plus the one lingering question that few expect. Don’t miss what sets this valuation apart.

Result: Fair Value of $107.09 (OVERVALUED)

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

However, regulatory pressures or escalating US-China trade tensions could quickly reshape the outlook and challenge assumptions behind the current valuation narrative.

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

Another View: Market Multiples Show Room for Upside

A different angle to valuing Alibaba compares its price-to-earnings ratio of 17.8x with the global Multiline Retail industry average of 19.9x, peers at 43.5x, and a fair ratio of 27.5x. This suggests Alibaba is trading at a notable discount, which may offer investors more upside than the narrative suggests. However, in practical terms, could this gap reflect hidden risks, or a real mispricing the market will eventually close?

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

Build Your Own Alibaba Group Holding Narrative

If you see things differently or want to dig into the numbers yourself, you can quickly craft your own Alibaba story in just a few 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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