Is Alibaba's "All Others" Revenues Becoming a Drag on Growth?

Core Insights - Alibaba is experiencing revenue growth challenges primarily due to a decline in its "All Others" segment, which saw a 25% year-over-year drop in Q2 FY26, making it the only segment to contract while core businesses continued to grow [2][11] Revenue Performance - The decline in the "All Others" segment is attributed to the disposal of Sun Art and Intime, alongside weaker performance from Cainiao, Alibaba's logistics arm [3][11] - Despite growth in Freshippo, Alibaba Health, and Amap, these gains were insufficient to offset the overall slowdown in the segment, which has become a drag on consolidated growth [3][5] Profitability Impact - Losses in the "All Others" segment have widened as Alibaba increased investments in technology and AI initiatives, putting additional pressure on overall group profitability [4][11] - The segment's revenues are primarily derived from direct sales and logistics services, which tend to have thinner margins and greater volatility, amplifying their impact on financial results [4] Competitive Landscape - Alibaba's logistics business is facing heightened competition from JD Logistics and Amazon Logistics, which are expanding their fulfillment and delivery capabilities [6][8] - JD Logistics reported over 24% revenue growth year-over-year in Q3 FY25, leveraging its self-owned infrastructure for better control over delivery times and costs compared to Alibaba's partner-driven model [7] - Amazon Logistics is enhancing its operational edge through significant investments in automation and infrastructure, offering faster delivery options that challenge Alibaba's logistics services [8] Stock Performance and Valuation - Alibaba's shares have increased by 40.3% over the past six months, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector, which grew by 2.2% and 5% respectively [9] - The stock is currently trading at a forward Price/Earnings ratio of 20.66X, lower than the industry's 25.02X, indicating a relatively undervalued position [13] - The Zacks Consensus Estimate for fiscal 2026 earnings is projected at $6.05 per share, reflecting a 32.85% year-over-year decline [16]