3 Reasons to Buy Alibaba Stock Like There's No Tomorrow

Core Viewpoint - Alibaba's stock has shown recovery potential, trading at approximately $103, and is considered a worthwhile investment due to its stabilizing business, AI advancements, and attractive valuation compared to peers [3][10]. Group 1: Business Stabilization - Alibaba's revenue growth has decelerated significantly from fiscal 2021 to fiscal 2023, with growth rates of 41%, 19%, 2%, 8%, and 5% respectively, primarily due to antitrust regulations, competition, and macroeconomic challenges [4][5]. - The company has expanded its overseas and cross-border marketplaces, such as Lazada and AliExpress, to reduce reliance on its domestic platforms, leading to a stabilization of growth rates [5][6]. - Analysts project revenue and adjusted earnings growth of 6% and 1% for fiscal 2025, and 8% and 13% for fiscal 2026, indicating a recovery trajectory [6]. Group 2: AI Investments - In 2023, Alibaba launched Qwen, a family of large language models, with the most powerful version, Qwen 2.5-Max, expected to outperform competitors like OpenAI's GPT-4 [7][8]. - The AI expansion is anticipated to attract more developers to Alibaba's cloud services, with the cloud intelligence group's revenue rising 7% year-over-year in the first half of fiscal 2025 [9]. Group 3: Valuation and Market Position - Alibaba's stock is trading at 11 times forward earnings, significantly lower than Alphabet and Amazon, which trade at 21 and 37 times respectively, indicating a potential undervaluation [10]. - The stock's discount is attributed to ongoing trade tensions between the U.S. and China, but improved diplomatic relations could attract value-seeking investors back to Alibaba [11]. - Despite challenges, Alibaba is expected to maintain its position as China's leading e-commerce and cloud company, making it a potentially attractive investment opportunity [12].