Could Buying Alibaba Stock Today Set You Up for Life?

Core Viewpoint - Alibaba's stock has underperformed compared to Amazon over the past decade, with Amazon's stock increasing by over 1,400% while Alibaba's has decreased by more than 15% [1] Group 1: Operational Performance - Despite stock struggles, Alibaba's revenue grew from $12.3 billion in 2015 to$130.3 billion in 2024, a more than 10-fold increase [2] - Operating income rose from $3.9 billion in 2015 to$14.1 billion in 2024 [2] - Recent growth in Alibaba's e-commerce segment has slowed due to a sluggish Chinese economy and competition, with Tmall and Taobao revenue increasing only 1% last quarter [4] Group 2: Strategic Initiatives - Alibaba has implemented a new software service fee based on gross merchandise value to improve competitiveness and has seen good uptake of its AI-powered marketing tool Quanzhantui [5] - The cross-border platforms AliExpress and Trendyol saw a revenue increase of 29% to $4.5 billion last quarter, although this segment is not yet profitable [6] - The cloud computing segment grew revenue by 7$379 million due to a focus on higher-margin projects [7] Group 3: AI and Technology Investments - Alibaba has experienced five consecutive quarters of triple-digit revenue growth from AI-related products and services, launching over 100 new open-source AI models [8] - The company has reduced prices on its large language models to drive adoption amid heightened competition in the AI space [8] Group 4: Valuation and Investment Interest - Alibaba is trading at a forward P/E ratio of less than 9 times, with $43.6 billion in net cash and$49.1 billion in equity security investments [9] - Notable investors, including billionaire David Tepper, have shown interest in Alibaba, with the stock representing over 15% of Tepper's portfolio [10] Group 5: Economic Context and Future Outlook - The Chinese government is attempting to stimulate the economy, which could benefit Alibaba, especially with potential threats of increased U.S. tariffs [11] - If Alibaba were to trade at a valuation similar to Amazon, it could see close to 4 times upside, and if it grew to Amazon's size, over 10 times upside is possible [12]