Is It Too Late To Consider Alibaba After 2025 Rebound And Restructuring News?

• If you have ever wondered whether Alibaba Group Holding at $158.32 is still a bargain or if most of the upside has already been priced in, you are in the right place to unpack that question calmly and clearly.
• The stock is up a hefty 86.4% year to date and 87.3% over the last 12 months, though it has slipped 3.9% in the last 30 days and is still 37.0% below where it was five years ago, which hints at both recovery potential and lingering market skepticism.
• Recent headlines have focused on Alibaba’s ongoing restructuring into separate business units and renewed focus on core e commerce and cloud. Investors see this as a way to unlock hidden value and sharpen execution. At the same time, shifts in Chinese regulatory tone and efforts to boost domestic growth have eased some of the macro risk overhang that weighed on sentiment in prior years.
• On our framework, Alibaba scores a 5 out of 6 valuation check score, suggesting it looks undervalued on most metrics. Next we will break down how different valuation approaches arrive at that view, while also pointing to a more holistic way of thinking about value that we will come back to at the end.

Alibaba Group Holding delivered 87.3% returns over the last year. See how this stacks up to the rest of the Multiline Retail industry.

Approach 1: Alibaba Group Holding Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today’s value. For Alibaba Group Holding, the model is a 2 stage Free Cash Flow to Equity approach built on CN¥ cash flow projections.

Alibaba’s latest twelve month free cash flow is about CN¥50.9 billion, and analysts expect this to expand significantly as the business scales. Simply Wall St combines analyst estimates for the next few years with its own extrapolations, resulting in projected free cash flow of roughly CN¥406.5 billion in 2035, adjusted back to today using an appropriate discount rate.

Adding these discounted cash flows together leads to an estimated intrinsic value of about $267.17 per share, compared with the current price around $158.32. That implies the stock trades at roughly a 40.7% discount to its DCF based value, which indicates the market is still pricing in a fair amount of caution despite stronger cash flow expectations.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Alibaba Group Holding is undervalued by 40.7%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Alibaba Group Holding.

Approach 2: Alibaba Group Holding Price vs Earnings

For profitable companies like Alibaba Group Holding, the price to earnings (PE) ratio is a useful snapshot of how much investors are willing to pay today for each dollar of current earnings. It distills expectations about future growth and risk into a single, comparable number.

In general, faster growing and lower risk businesses tend to trade on higher PE multiples, while slower, more volatile companies usually trade on lower multiples. Alibaba currently trades on about 19.9x earnings, which is roughly in line with the Multiline Retail industry average of about 19.8x but well below the broader peer group average of around 37.5x. This suggests the market is assigning it a sizeable discount relative to many comparable stocks.

Simply Wall St’s Fair Ratio framework estimates what PE multiple a company might reasonably trade on given its earnings growth outlook, profit margins, industry, market cap and risk profile. For Alibaba, that Fair Ratio is 30.8x, compared with the current 19.9x. Because this approach is tailored to Alibaba’s own fundamentals rather than broad peer comparisons, it provides a more nuanced view. On that basis, the shares appear meaningfully undervalued.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Alibaba Group Holding Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories you create about a company that connect your view of its future (revenue, earnings and margins) to a financial forecast and ultimately to a Fair Value estimate you can compare with today’s share price.

On Simply Wall St’s Community page, Narratives are an easy, accessible tool used by millions of investors to spell out why they think a business will perform a certain way, translate that story into numbers, and then see if the stock looks cheap or expensive relative to their own Fair Value, with those Narratives automatically updating as new earnings, news and data arrive.

For Alibaba, for example, one investor might build a cautious Narrative that focuses on trade tensions, regulatory pressure and slower growth, leading them to a Fair Value near $107 per share and a decision to wait or trim. Another might emphasize accelerating cloud and AI momentum, resilient e commerce and improving margins, arriving at a Fair Value closer to $197 per share and a view that the stock still has meaningful upside at current levels.

For Alibaba Group Holding however we will make it really easy for you with previews of two leading Alibaba Group Holding Narratives:

🐂 Alibaba Group Holding Bull Case

Fair value: $196.83

Implied undervaluation vs current price: 19.6%

Forecast revenue growth: 8.79%

• Views Alibaba as a long term beneficiary of heavy investment in AI, cloud and quick commerce, with these initiatives expected to accelerate revenue and expand margins once scaled.
• Highlights ecosystem integration across e commerce, local services and loyalty programs as a driver of higher user engagement, cross selling and lifetime value.
• Acknowledges short term EBITDA and free cash flow pressure from large capex and operating spend, but argues that secular demand and improved efficiency justify a higher fair value.

🐻 Alibaba Group Holding Bear Case

Fair value: $107.09

Implied overvaluation vs current price: 47.8%

Forecast revenue growth: 14.12%

• Applies a DCF framework that, even with solid growth and sizable net cash, points to a materially lower fair value than today’s share price.
• Emphasizes macro and geopolitical risks, including US China trade tensions, regulatory pressure and currency exposure, as potential brakes on valuation.
• Sees strong AI, cloud and e commerce momentum, but argues that these positives are already priced in, leaving a limited margin of safety at current levels.

Stepping back, these contrasting Narratives show how different assumptions about Alibaba’s AI and cloud payoff timeline, competitive intensity and macro risks can still be grounded in the same underlying data. The key is to decide which story, or blend of stories, best matches your view of the future and then track how new information either reinforces or challenges that Narrative over time.

Do you think there's more to the story for Alibaba Group Holding? Head over to our Community to see what others are saying!

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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