What Alibaba Needs to Prove in 2026

Core Insights - Alibaba Group ended 2025 in a stronger position, with growth in cloud and AI segments, stabilization in e-commerce, and a clarified ambition to become a broader technology and AI platform [1][2] Group 1: AI-Driven Cloud Growth - Alibaba's cloud business showed significant growth in 2025, with AI-related workloads increasing at triple-digit rates, accounting for over 20% of external cloud revenue, validating past investments [4] - In 2026, the company must demonstrate that this growth translates into improved profitability rather than just increased scale, as AI workloads require substantial ongoing investment [5][6] Group 2: E-Commerce Stability - Alibaba needs to prove that its e-commerce segment can maintain stability without continuous financial support, having stopped the decline in its core commerce business in 2025 [7] - The focus for 2026 will be on sustaining market position against competitors without sacrificing margins, ensuring that commerce can generate steady cash flow to support investments in cloud and AI [8] Group 3: Quick Commerce Economics - Quick commerce became a strategic priority, but it significantly impacted profitability due to high fulfillment costs and competition, with adjusted EBITA for the commerce division falling 47% year-over-year in the first half of 2025 [10] - In 2026, Alibaba must show a clear path to improvement in quick commerce, including better order density and smarter subsidy use, to maintain investor confidence [11] Group 4: Focus and Discipline - Historically, Alibaba's weakness has been its lack of focus, pursuing too many initiatives simultaneously, which diluted accountability [13] - In 2026, the company must prioritize cloud, AI, and core commerce while ensuring clear capital allocation and consistent execution to build trust with investors [14] Conclusion - Alibaba enters 2026 with momentum but must prove the effectiveness of its strategic reset through improved profitability in cloud, self-sustaining e-commerce, narrowing quick commerce losses, and disciplined execution [15][16]