Wall Street Can’t Get Enough of Alibaba Stock. Should You Buy BABA Here?

Core Viewpoint - Wall Street analysts are increasingly optimistic about Alibaba Group (BABA), driven by its cloud and AI momentum, with Morgan Stanley raising its 12-month price target from $165 to $200 due to strong performance in its cloud business and AI investments [1][2]. Group 1: Company Developments - Alibaba is expanding its data centers in Brazil, France, and the Netherlands, collaborating with Nvidia on "physical AI," and launching its Qwen3-Max AI model, which has over one trillion parameters [2]. - The company is significantly enhancing its cloud computing division, Alibaba Cloud, which is a major contributor to its revenue growth [3]. Group 2: Market Performance - Alibaba's market capitalization is approximately $426 billion, and its stock has more than doubled in 2025, making it one of the top performers in the market [4]. - The stock rally is attributed to easing regulatory pressures in China and strong growth driven by cloud, international, and AI sectors, alongside optimism regarding Jack Ma's return and positive Q1 earnings [4]. Group 3: Valuation Metrics - Alibaba's price-to-sales (P/S) ratio stands at 2.86, significantly higher than the sector median of 0.99, indicating a relatively expensive stock compared to peers [5]. - The price-to-earnings (P/E) ratio is 19.95, slightly lower than the sector median of 20.42, suggesting a more reasonable valuation in this aspect [5]. - The current dividend growth rate is -47.5% (TTM), compared to the sector median of 5.4%, and the dividend yield is only 1.2%, indicating a less attractive option for income-focused investors [5].