Alibaba accelerates Cloud growth, creating a new growth driver for BABA stock

Alibaba accelerated Cloud revenue growth to 45% and continues to invest billions of dollars in artificial intelligence. Despite lower earnings and negative free cash flow, strong Cloud performance and positive analyst sentiment continue to support the potential for BABA stock to rise towards 178 USD.

Alibaba Group Holding Limited (NYSE: BABA) delivered mixed results for the June 2026 quarter. While revenue came in broadly in line with analysts' expectations, adjusted earnings fell short of forecasts due to heavy spending on AI, cloud infrastructure, and the development of new business areas. At the same time, the Cloud business once again stood out as the main positive, continuing to grow rapidly on the back of strong demand for AI solutions.

Alibaba did not provide quantitative revenue or earnings guidance. However, management expects further acceleration in its AI + Cloud business, supported by demand for computing capacity that continues to outstrip supply. The company also expects to increase the monetisation of its AI products while gradually improving the profitability of its Cloud business. At the same time, Alibaba intends to steadily improve the economics of its quick commerce business, reducing the pressure this segment places on profitability while placing greater emphasis on efficiency in its international e-commerce operations. However, capital expenditure on AI and cloud infrastructure will remain elevated, meaning free cash flow and earnings could remain under pressure over the coming quarters.

This article examines Alibaba Group Holding Limited, explains the company's principal sources of revenue, provides a fundamental analysis of Alibaba Group (BABA), presents a technical analysis of BABA, and offers a forecast for Alibaba Group stock for the second half of 2026.

About Alibaba Group Holding Limited

Alibaba Group Holding Limited is the largest Chinese technology company. Founded in 1999 in Hangzhou by Jack Ma (also known as Ma Yun) and his team, the company operates in e-commerce, cloud computing, financial technology, logistics, and the media and entertainment sectors. Its platforms (AliExpress, Taobao, and Tmall) connect millions of buyers and sellers worldwide. Alibaba is also actively advancing Artificial Intelligence (AI) and innovative technologies, playing a pivotal role in the global digital economy.

Alibaba’s initial public offering (IPO), which raised USD 25.0 billion, took place on 19 September 2014 on the New York Stock Exchange under the ticker symbol BABA. At the time, it was the largest IPO in history.

Alibaba Group Holding Limited’s main revenue sources

Alibaba Group’s revenue is generated across several core segments:

• Alibaba China E-commerce Group: the company’s primary domestic e-commerce business in China. Revenue comes from Taobao and Tmall, quick commerce services via Taobao Instant Commerce and Ele.me, the Fliggy platform, Chinese wholesale operations, and customer management revenue, direct sales, logistics, and value-added services. This segment remains the group’s main revenue source.
• Alibaba International Digital Commerce Group: international digital commerce. Revenue comes from international retail and wholesale operations, including AliExpress and other overseas channels, as well as cross-border value-added services.
• Cloud Intelligence Group: Alibaba Cloud’s computing and AI products. Revenue is generated from public cloud services, data storage and processing, computing capacity, enterprise cloud services, and AI-related solutions.
• All others: this category includes Freshippo, Cainiao, Alibaba Health, Hujing Digital Media and Entertainment Group, Amap, Qwen Consumer Business Group, Lingxi Games, DingTalk, and other businesses. Most revenue in this segment comes from direct sales and logistics services.

Alibaba Group Holding Limited financial results for the September 2024 quarter

On 15 November 2024, Alibaba Group Holding Limited published its results for the September 2024 quarter, ended 30 September. The key figures are presented below:

• Revenue: 33.70 billion USD (+5%)
• Net income: 6.20 billion USD (+63%)
• Earnings per share: 2.59 USD (+69%)

Revenue by segment:

• Taobao and Tmall Group: 14.10 billion USD (+1%)
• Cloud Intelligence Group: 4.22 billion USD (+7%)
• International Digital Commerce Group: 4.51 billion USD (+29%)
• Cainiao Smart Logistics Network: 3.51 billion USD (+8%)
• Local Services Group: 2.52 billion USD (+14%)
• Digital Media and Entertainment Group: 0.81 billion USD (–1%)
• All Others: 7.43 billion USD (+9%)

Alibaba ended the quarter with growth across its core business segments. Its e-commerce operations maintained positive momentum, supported by higher order volumes and growth in Customer Management Revenue. At the same time, Alibaba Cloud received an additional boost from strong demand for AI-related products. However, adjusted earnings came under pressure due to increased investment in cloud infrastructure and merchant support.

Looking ahead, management expects to sustain growth through the continued expansion of Alibaba Cloud and its AI products, improved efficiency at Taobao and Tmall, and enhancements to its payment and logistics services through strategic partnerships. The company intends to continue investing in these key areas, expecting them to strengthen its position in e-commerce and cloud technologies.

Alibaba also returned value to shareholders by repurchasing 4.10 billion USD of its own shares.

Alibaba Group Holding Limited financial results for the December 2024 quarter

On 20 February 2025, Alibaba Group Holding Limited published its results for the December 2024 quarter, ended 31 December. The key figures are presented below:

• Revenue: 38.38 billion USD (+8%)
• Net income: 6.36 billion USD (+333%)
• Earnings per share: 2.93 USD (+13%)

Revenue by segment:

• Taobao and Tmall Group: 18.64 billion USD (+5%)
• Cloud Intelligence Group: 4.34 billion USD (+13%)
• International Digital Commerce Group: 5.17 billion USD (+32%)
• Cainiao Smart Logistics Network: 3.86 billion USD (–1%)
• Local Services Group: 2.32 billion USD (+12%)
• Digital Media and Entertainment Group: 0.75 billion USD (+8%)
• All Others: 7.27 billion USD (+13%)

Alibaba's results exceeded analysts' expectations, with the company outperforming forecasts for both revenue and adjusted earnings. Management also highlighted progress in implementing its customer-focused strategy and advancing its AI technologies. Alibaba continues to invest heavily in cloud infrastructure and AI, viewing these areas as key long-term growth drivers.

Alibaba did not provide specific financial guidance for the following quarter. However, analysts expected the business to continue growing. Over the longer term, the company plans to invest approximately 53.00 billion USD in cloud computing and AI infrastructure over the next three years. These investments are expected to strengthen Alibaba's position in the global cloud services market. However, the scale of the planned spending has raised investor concerns about potential pressure on the company's earnings.

Alibaba Group Holding Limited financial results for the March 2025 quarter

On 15 May 2025, Alibaba Group Holding Limited published its results for the March 2025 quarter, ended 31 March. The key figures are presented below:

• Revenue: 32.58 billion USD (+7%)
• Net income: 1.65 billion USD (+1203%)
• Earnings per share: 0.71 USD (+296%)

Revenue by segment:

• Taobao and Tmall Group: 13.96 billion USD (+9%)
• Cloud Intelligence Group: 4.15 billion USD (+18%)
• International Digital Commerce Group: 4.62 billion USD (+22%)
• Cainiao Smart Logistics Network: 2.97 billion USD (–12%)
• Local Services Group: 2.22 billion USD (+10%)
• Digital Media and Entertainment Group: 0.77 billion USD (+12%)
• All Others: 7.44 billion USD (+5%)

Alibaba's quarterly results showed steady revenue growth, supported by its Taobao and Tmall business, international e-commerce, and the Cloud business. Demand for AI-related products was particularly strong. However, net income fell short of analysts' expectations, which, together with weak consumer spending in China and intense competition, triggered a negative reaction from investors.

Management expected revenue growth to return to double-digit rates in the second half of 2025. The main growth drivers were expected to be the continued expansion of the Cloud business, rising demand for AI products, and investment in digital infrastructure to support the company's long-term growth.

Alibaba Group Holding Limited financial results for the June 2025 quarter

On 29 August 2025, Alibaba Group Holding Limited published its results for the June 2025 quarter, ended 30 June. The key figures are presented below:

• Revenue: 34.57 billion USD (+2%)
• Net income: 5.92 billion USD (+76%)
• Earnings per share: 2.51 USD (+82%)

Revenue by segment:

• Alibaba China E-commerce Group: 19.55 billion USD (+10%)
• Alibaba International Digital Commerce Group: 4.85 billion USD (+19%)
• Cloud Intelligence Group: 4.66 billion USD (+26%)
• All Others: 8.18 billion USD (–28%)

Alibaba's results for the June 2025 quarter were mixed. Revenue fell short of analysts' expectations, while adjusted earnings declined amid increased investment. Nevertheless, the company's core business segments continued to grow. The Cloud business recorded the strongest growth, driven by demand for AI solutions, while both domestic and international e-commerce continued to expand. Profitability came under pressure from substantial investment in cloud infrastructure and the expansion of the company's quick commerce business.

Management did not provide specific financial guidance but reaffirmed its focus on two strategic priorities: its consumer business and AI + Cloud. Capital expenditure is expected to remain elevated over the coming quarters as Alibaba continues to invest in cloud and AI infrastructure, after which the company expects to gradually monetise these investments. Alibaba also expects accelerated growth in its Cloud business, continued growth in e-commerce users and order volumes, and a stronger international market position.

Alibaba Group Holding Limited financial results for the

September 2025 quarter

On 29 November 2025, Alibaba Group Holding Limited published its results for the September 2025 quarter, ended 30 September. The key figures are presented below:

• Revenue: 34.81 billion USD (+5%)
• Net income: 1.45 billion USD (–72%)
• Earnings per share: 0.61 USD (–71%)

Revenue by segment:

• Alibaba China E-commerce Group: 18.62 billion USD (+16%)
• Alibaba International Digital Commerce Group: 4.89 billion USD (+10%)
• Cloud Intelligence Group: 5.59 billion USD (+34%)
• All Others: 8.85 billion USD (–25%)

Alibaba's results for the September 2025 quarter were mixed. Revenue exceeded analysts' expectations, while earnings per share fell short of forecasts. The main growth drivers were the Cloud business, international e-commerce, and quick commerce services. At the same time, substantial spending on marketing, subsidies, quick commerce, cloud infrastructure, and AI led to a sharp decline in adjusted earnings and negative free cash flow.

Management expected quick commerce spending to have already peaked, with subsidy and marketing expenditure beginning to decline over the coming quarters, while order economics continued to improve. Alibaba intends to continue investing heavily in cloud technologies and AI, expecting to accelerate growth in these areas and strengthen its position in e-commerce, even if this continues to put pressure on profitability in the short term.

Alibaba Group Holding Limited financial results for the December 2025 quarter

On 19 March 2026, Alibaba Group Holding Limited published its results for the December 2025 quarter, ended 31 December. The key figures are presented below:

• Revenue: 40.73 billion USD (+2%)
• Net income: 2.24 billion USD (–66%)
• Earnings per share: 0.85 USD (–67%)

Revenue by segment:

• Alibaba China E-commerce Group: 22.79 billion USD (+6%)
• Alibaba International Digital Commerce Group: 5.61 billion USD (+4%)
• Cloud Intelligence Group: 6.19 billion USD (+36%)
• All Others: 9.63 billion USD (–25%)

Alibaba's results for the December 2025 quarter fell short of analysts' expectations in both revenue and earnings. The Cloud business remained the primary growth driver, supported by strong demand for AI solutions. Substantial investment in quick commerce, improvements to the user experience, and technology infrastructure placed significant pressure on margins and cash flow. Management also highlighted improving order economics in its quick commerce business, including higher average order values, stronger customer retention, and improved logistics efficiency.

Alibaba did not provide quantitative guidance for the following quarter, instead offering qualitative guidance. Management expects continued growth in its Cloud business and AI-related operations, along with gradual improvements in the efficiency of its quick commerce business, which should gradually reduce the pressure this segment places on the company's profitability.

Alibaba Group Holding Limited financial results for the June 2026 quarter

On 20 August 2026, Alibaba Group Holding Limited published its results for the June 2026 quarter, ended 30 June. The key figures are presented below:

• Revenue: 39.64 billion USD (+9%)
• Net income: 1.54 billion USD (–75%)
• Earnings per share: 0.55 USD (–79%)

Revenue by segment:

• Alibaba E-commerce Group: 30.34 billion USD (+4%)
• AI Cloud and Compute Services: 7.14 billion USD (+45%)
• AI Labs and Applications: 0.49 billion USD (+16%)
• All Others: 4.25 billion USD (+1%)

Alibaba's results for the June 2026 quarter, the first quarter of the company's 2027 financial year, were strong in terms of Cloud and AI growth but weak in terms of earnings and free cash flow. Revenue increased 9% to 39.64 billion USD, broadly in line with analysts' expectations. However, adjusted earnings per ADS were 1.26 USD, compared with market expectations of approximately 1.55 USD, falling around 19% short of the consensus forecast. The weaker-than-expected earnings, driven by sharply higher expenditure, were one of the main reasons for the market's negative reaction following the results.

The Cloud business once again stood out as the main positive. Revenue from AI Cloud and Compute Services increased by 45% to 7.14 billion USD, while adjusted EBITA rose by 133% to 830 million USD, with a margin of approximately 12%. Revenue from AI products reached 1.82 billion USD, recording triple-digit growth for the twelfth consecutive quarter, confirming that Alibaba is gradually moving from investing in AI to commercialising these investments. However, AI Labs and Applications remains a major cost centre. Despite revenue increasing by 16% to 492 million USD, its adjusted EBITA loss widened to 2.04 billion USD due to spending on AI model development and the Qwen application.

The picture in e-commerce remained mixed. Revenue from the company's China business declined by 8% to 16.35 billion USD, reflecting weak transaction activity in the domestic market. By contrast, quick commerce revenue increased by 45% to 7.86 billion USD, driven by Taobao Instant Commerce and Freshippo, while order economics continued to improve. International e-commerce revenue declined by 1% to 4.09 billion USD. However, AliExpress achieved operating profitability for the first time.

As a result, Alibaba's principal growth drivers remain its Cloud and quick commerce businesses. At the same time, weak domestic demand and the high cost of developing its proprietary AI ecosystem continue to limit earnings growth.

The main weakness in the results was the noticeable pressure on profitability. Both operating and adjusted earnings declined significantly, while margins contracted. Net income also fell sharply, although part of the decline reflected investment revaluations, asset impairment, and other one-off factors. However, the decline in adjusted earnings confirms that higher expenditure is genuinely putting pressure on the company's core business.

An even more important factor is free cash flow, which turned deeply negative due to a sharp increase in capital expenditure. The company has already completed a significant part of its multi-year investment program but indicated that investment could increase further in response to strong demand for computing capacity. Management views this spending as an investment in future growth. It expects infrastructure expansion to accelerate growth in its Cloud and AI revenue, while the increasing use of its own processors should improve profitability over time. At the same time, the company continues to maintain substantial liquidity to finance this strategy.

Alibaba did not provide quantitative revenue or earnings guidance but expects further acceleration in its Cloud and AI businesses. As early as the following quarter, annualised revenue from AI products is expected to approach 10 billion USD, while by 2030 the company aims to increase external cloud revenue to 100 billion USD.

At the same time, Alibaba intends to improve the profitability of its Cloud business, maintain the profitability of its traditional e-commerce operations, and further improve the economics of its quick commerce business. Internationally, the company's priority is gradually shifting from maximising sales growth towards improving efficiency and profitability.

Key growth drivers for Alibaba Group Holding Limited stock

An analysis of Alibaba Group Holding Limited stock in 2026 should focus on several key indicators. These provide insight into how successfully the company is accelerating growth in its Cloud business, improving profitability, restoring monetisation in its e-commerce operations, and moving closer to the point at which its substantial investment in AI infrastructure begins to generate sustainable free cash flow.

Alibaba Cloud revenue growth. Alibaba Cloud revenue growth. The Cloud business is becoming Alibaba's primary growth driver. The longer the Cloud segment can sustain a high growth rate, the stronger the case for the market to value Alibaba as a leading provider of cloud and AI infrastructure.

The trend in Cloud revenue growth is particularly important. Accelerating Cloud revenue indicates that Alibaba's substantial investment in data centres, computing capacity, and AI is beginning to create a new source of growth. Conversely, a noticeable slowdown in the Cloud business while investment remains elevated would be a negative signal, as it would call into question the future return on those investments.

Alibaba Cloud profitability. Rapid growth in Cloud revenue is valuable only if the segment's economics improve at the same time. Therefore, the second key indicator is Alibaba Cloud's adjusted EBITA margin. An improving margin shows that, as the business expands, a larger share of additional revenue is converted into profit.

For Alibaba stock, the most favourable scenario would be a combination of rapid Cloud revenue growth and gradual margin improvement. Conversely, if Cloud revenue continues to grow while the segment's profitability begins to decline, investors will need to pay closer attention to computing infrastructure costs, pricing competition, and rising AI development expenditure.

Customer Management Revenue. Despite the growing importance of Cloud technologies and AI, Alibaba's China e-commerce business remains the company's foundation and a key source of cash flow. Investors should therefore monitor Customer Management Revenue – the revenue Alibaba generates from advertising, marketing services, and other paid tools it provides to merchants on its e-commerce platforms.

Growth in this metric indicates that Alibaba is generating more revenue from merchant and customer activity, even without a similarly rapid increase in sales volumes. Sustained growth in Customer Management Revenue would indicate improving conditions in Alibaba's core business and give the company greater capacity to invest in Cloud technologies and AI.

Capital expenditure and free cash flow. Capital expenditure and free cash flow help investors understand where Alibaba stands in its investment cycle. Since 2025, the company's CAPEX has increased rapidly as Alibaba has invested heavily in data centres, servers, AI infrastructure, and its own computing capacity. At the same time, free cash flow has turned negative, indicating that Alibaba is currently reinvesting the cash it generates to develop future sources of growth.

For investors, the key signal will be when CAPEX growth begins to slow and free cash flow starts to recover. If this occurs while Alibaba Cloud continues to grow rapidly and improve its profitability, it would indicate that the company is transitioning from a period of heavy investment to one in which it begins to generate returns from the infrastructure it has built.

The fundamental analysis of BABA based on the indicators discussed above shows that Alibaba is currently in the most capital-intensive phase of its investment cycle. The Cloud business is expanding rapidly, with revenue growth accelerating to 45% and the EBITA margin reaching 12%. At the same time, the core e-commerce business remains weak, while the sharp increase in CAPEX to 10.04 billion USD has reduced free cash flow to –6.58 billion USD.

The key question now is whether Alibaba's substantial investment in AI and cloud infrastructure will begin to generate financial returns. A positive signal would be continued rapid growth in Alibaba Cloud and improving profitability, alongside stabilising CAPEX and recovering free cash flow (FCF). For now, however, negative free cash flow shows that Alibaba has not yet transitioned from a period of heavy investment to one of generating sustainable cash flow from those investments.

Expert forecasts for Alibaba Group Holding Limited’s stock for 2026

• Barchart: 21 of 26 analysts rate Alibaba Group stock as Strong Buy, 1 as Moderate Buy, and 4 as Hold. The highest price target is 220 USD, while the lowest is 124 USD.
• MarketBeat: 18 of 23 analysts rate the stock as Buy, while 5 rate it as Hold. The highest price target is 225 USD, while the lowest is 135 USD.
• TipRanks: all 11 analysts rate Alibaba stock as Buy. The highest price target is 220 USD, while the lowest is 160 USD.
• Stock Analysis: 30 of 40 analysts rate Alibaba Group stock as Strong Buy, 8 as Buy, 1 as Hold, and 1 as Sell. The highest price target is 237 USD, while the lowest is 92 USD.

Analysts' views on Alibaba remain broadly positive. Across all four platforms, the majority recommend buying the stock, while on TipRanks all 11 analysts rate Alibaba stock as Buy. This suggests that the market generally expects Alibaba shares to continue rising.

At the same time, the range of price targets remains wide. The highest targets range from 220 USD to 237 USD, while the most conservative forecasts range from 92 USD to 160 USD. This disparity suggests that analysts are positive about Alibaba's prospects but differ considerably in their assessment of how quickly the company can translate growth in its Cloud business and substantial AI investment into higher earnings and free cash flow.

Overall, the analyst consensus is bullish, although uncertainty regarding the stock's fair value remains high.

However, the outlook for Alibaba Group Holding Limited stock depends not only on the company's fundamentals and analysts' forecasts but also on the current technical picture. The following section examines the technical outlook in greater detail.

Alibaba Group Holding Limited stock price forecast for 2026

*At the time of writing, Alibaba Group Holding Limited (BABA) stock is trading at around 120 USD.

On the daily chart, BABA stock is trading below the 200-period Moving Average, indicating that the long-term downtrend remains in place. The Stochastic indicator is in neutral territory. At the same time, the 20-period and 50-period Moving Averages have formed a bullish crossover, which may signal either a correction within the prevailing downtrend or the early stages of a new uptrend.

Alibaba's recent secondary share offering put short-term pressure on the stock price. However, strong demand for the offering, which significantly exceeded the number of shares available, together with Jack Ma's substantial share purchase, provides grounds for a more optimistic outlook and supports a bullish scenario for Alibaba stock. Based on the current performance of Alibaba Group Holding Limited stock, the following scenario outlines its potential movement in the second half of 2026.

The trading strategy for Alibaba Group Holding Limited stock is to place a Buy Stop order at 131.00 USD, above the 130.50 USD resistance level. Two profit targets may be used: the first Take Profit at 146.00 USD and the second at 178.00 USD, just below the 180.00 USD resistance level.

A Stop Loss is recommended at 116.00 USD, below the 116.60 USD support level.

The risk-to-reward ratio is 1:1 for the first target and 1:3.1 for the second.

Position management: Once the stock has moved 10% in the projected direction, move the Stop Loss to the entry level. The protective stop should then be trailed 10% behind the price. Continue trailing the Stop Loss until the position is closed, either at the Take Profit or the Stop Loss, depending on which level is reached first.*

Alibaba raises 10.2 billion USD to expand its AI business

In August 2026, Alibaba completed one of the largest secondary share offerings in its history. The company issued 710 million new ordinary shares, raising approximately 10.2 billion USD. The new shares represented approximately 3.6% of the enlarged share capital, diluting the holdings of existing shareholders. The transaction became the largest secondary issuance of new shares ever completed by a company listed on the Hong Kong Stock Exchange.

The offering price was equivalent to 14.4 USD per ordinary share, or approximately 115 USD per Alibaba ADS. This represented an 8.4% discount to the closing share price. Such discounts are typically required to attract large institutional investors.

Alibaba said it would invest 100% of the proceeds in AI, including computing infrastructure, servers, processors, and proprietary AI models. As a result, the secondary share offering enables the company to continue expanding its computing capacity aggressively without relying solely on its existing cash reserves or increasing its debt burden.

The market initially reacted negatively to the offering. Following the announcement of the transaction terms, Alibaba shares fell 8%. The main concerns were the offering discount, shareholder dilution, and investors' doubts about the returns on the company's substantial investment in AI. The news appeared particularly negative following the June 2026 quarterly results, in which Alibaba's net income fell 75% and free cash flow remained deeply negative.

At the same time, the offering attracted strong demand. Orders totalled 28 billion USD, almost three times the size of the offering. A significant proportion of the shares was acquired by sovereign wealth funds and long-term institutional investors. This suggests that, despite the negative share price reaction, large investors remain willing to finance Alibaba's strategy at its current valuation.

Another positive signal came from share purchases by Alibaba's senior management following the offering. Chairman Joe Tsai and Chief Executive Officer Eddie Wu purchased more than 25 million USD worth of shares. At the same time, company founder Jack Ma, according to Chinese media reports, increased his holding by approximately 77 million USD. Although these purchases do not eliminate the dilution effect, they demonstrate management's and the founder's confidence in the long-term returns on the company's AI investment.

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