Assessing Alibaba (NYSE:BABA) Valuation Following Recent Share Price Momentum

Alibaba Group Holding (NYSE:BABA) has seen its stock price pick up steady momentum over the past month, rising more than 36%. This increase comes as investors revisit the stock’s value proposition in light of shifting sentiment around China’s tech sectors.

See our latest analysis for Alibaba Group Holding.

After a tough stretch earlier in the year, Alibaba’s recent run-up stands out as the strongest momentum the stock has shown in months, fueled by renewed optimism for Chinese tech and hints of improving fundamentals. Despite the current energy in the share price, the company’s 1-year total shareholder return of 0.7% suggests that longer-term gains have been much more subdued.

If you’re fascinated by companies gaining momentum, it could be a great time to broaden your perspective and discover fast growing stocks with high insider ownership

With its recent rally and annual gains lagging broader benchmarks, the questions now turn to valuation. Is Alibaba's current price still underestimating its potential, or is the promise of future growth already fully reflected in the stock?

Most Popular Narrative: 76.8% Overvalued

According to StefanoF, the fair value estimate for Alibaba is dramatically below its current close. This suggests the recent rally may be outpacing fundamental growth projections.

Strong AI/cloud momentum with expanding market share, dominant e-commerce position in China, strong cash generation capabilities, and reasonable valuation multiples relative to growth. Bottom Line: 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.

Read the complete narrative.

Is the calculation behind that fair value what you expected? A sharp disconnect between the company’s strengths and the numeric bottom line may prompt questions about how the narrative justifies it. Find out which assumptions about profits, margins, and future tech leadership influence the outcome. The real story lies in the details—see what makes this number the most debated in Alibaba circles.

Result: Fair Value of $107.09 (OVERVALUED)

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

However, persistent US-China trade tensions and ongoing regulatory pressures remain key risks. These factors could quickly shift sentiment and challenge the bullish narrative.

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

Another View: Multiples Suggest Good Relative Value

Looking at value through the lens of the price-to-earnings ratio, a different story emerges. Alibaba trades at 20.3x earnings, a discount not only to industry peers averaging 48.6x, but also below the global industry average of 21.7x. Even the fair ratio, at 29.4x, suggests the market could re-rate the stock higher if sentiment shifts. This gap may reveal a hidden opportunity, or it could point to ongoing risks keeping the stock anchored.

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

Build Your Own Alibaba Group Holding Narrative

If you see the numbers differently or want to dig deeper yourself, it only takes a few minutes to shape your own perspective. Do it your way.

A good starting point is our analysis highlighting 3 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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