Core Viewpoint - Alibaba Group Holding Limited is expected to report second-quarter fiscal 2026 results on November 25, with revenue estimates indicating a modest increase but a significant decline in earnings per share compared to the previous year [1][5]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for revenues is $34.43 billion, reflecting a 2.17% increase from the same quarter last year [1]. - The earnings estimate is 66 cents per share, representing a decline of 69.3% from the prior-year quarter [1]. Earnings Surprise History - Alibaba has a mixed earnings surprise history, with a negative surprise of 3.29% in the last reported quarter. The company has beaten the Zacks Consensus Estimate in two of the last four quarters, with an average surprise of 0.97% [2]. Earnings Prediction Model - The current Earnings ESP is 0.00%, and the Zacks Rank is 5 (Strong Sell), indicating low odds for an earnings beat this time [3]. Market Challenges - The company faces significant challenges, including a deepening deflationary environment in China, with consumer prices falling 0.4% year-over-year in August and 0.3% in September, which constrains Alibaba's core commerce business [6]. - Competitive pressures from PDD Holdings are intensifying, leading to destructive price wars that further squeeze margins [7]. Investment and Margin Pressure - Heavy investments in quick commerce and instant delivery services have compressed margins as the company prioritizes market share over profitability [6]. - The commitment of RMB 380 billion to AI and cloud infrastructure has resulted in substantial capital expenditures, impacting near-term profitability [9]. Revenue Growth Constraints - Revenue growth is likely constrained by weak consumer sentiment and sluggish retail sales growth, despite some strength in the cloud segment [10]. Stock Performance and Valuation - Alibaba shares have surged 80.8% year-to-date, outperforming the industry and major indices, but face tough competition from Amazon, JD.com, and PDD Holdings [11]. - The stock is trading at a premium with a forward 12-month P/S ratio of 2.36X compared to the industry average of 2.26X, indicating a stretched valuation [15]. Investment Thesis - The upcoming earnings report is expected to highlight deteriorating fundamentals due to persistent deflation, aggressive competition, and margin compression from heavy investments [18]. - Investors are advised to wait for clearer signals of a turnaround and more attractive entry points before considering investment in Alibaba [19].