Key Takeaways Alibaba shares rose 28% in six months despite a 71% drop in non-GAAP EPS and 78% EBITDA plunge.BABA's AI push lifted cloud revenues 34%, but costs and subsidies crushed margins and profits.BABA trades at 2.29X forward sales vs. 1.84X industry as profits slide and competition intensifies.Alibaba (BABA) shares have surged 28% in the past six-month period, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector. While the rally has rewarded shareholders, a close ...

Core Insights - Fiverr International (FVRR) is set to report its fourth-quarter 2025 results on February 18, 2026, with projected net sales between $104.3 million and $112.3 million, indicating a growth of 1% to 8% compared to the fourth quarter of 2024, reflecting macroeconomic uncertainty [1][8] - The Zacks Consensus Estimate for net sales stands at $108.71 million, suggesting a growth of 4.86% from the previous year's quarter [1] - The estimated earnings for the fourth quarter are 76 cents per share, showing an 18.75% increase from the year-ago quarter [2] Financial Performance - FVRR's adjusted EBITDA for the fourth quarter is projected to be between $23.9 million and $27.9 million, with a margin of 24% at the midpoint [7] - The company has a history of earnings surprises, with a 10% surprise in the last reported quarter, having beaten the Zacks Consensus Estimate once in the last four quarters [5] Market Trends - The U.S. independent professional workforce grew by 4.3% to an estimated 6.9 million, indicating a positive trend in freelance work [9] - Demand for AI-related services has surged, with AI video creator demand increasing by 66%, searches for AI automation rising by 136%, and prompt engineering growing by 76% [9] Stock Performance - Fiverr shares have declined by 36% over the past six months, underperforming both the Zacks Retail-Wholesale sector and the Zacks Internet – Commerce industry [10] - The stock is currently trading at a forward price-to-sales multiple of 1.08x, which is below the industry average of 1.86x, indicating a potentially undervalued position [13] Strategic Initiatives - The company underwent an AI-focused restructuring in September 2025, resulting in a 30% reduction in workforce, which is expected to enhance profitability and margin expansion [7][8] - Management is targeting a 25% adjusted EBITDA margin by 2026, reflecting a strategic shift towards higher-value projects and AI-powered marketplace capabilities [14]

Core Insights - MercadoLibre's (MELI) shares are currently overvalued with a Value Score of C, raising concerns among investors about its premium valuation [1] - The forward 12-month Price/Earnings ratio stands at approximately 32.02X, significantly higher than the Zacks Internet – Commerce industry's average of 22.23X, indicating strong growth optimism [1] Stock Performance - MELI shares have declined by 13% over the past six months, underperforming the Zacks Retail-Wholesale sector's decline of 0.3% and the S&P 500 index's growth of 9.6% [4] - In comparison, Alibaba shares increased by about 29.7%, while Amazon and Shopify saw declines of roughly 9% and 20.3%, respectively, reflecting varied sentiment in the global e-commerce landscape [6] Competitive Landscape - MercadoLibre faces intense competition from global and regional players such as Amazon, Alibaba, and Shopify, which are aggressively pushing on pricing, delivery speed, and ecosystem expansion [5][9] - Amazon's logistics strength and broad retail ecosystem make it a formidable rival, while Alibaba leverages its marketplace expertise and fintech ecosystem to challenge MercadoLibre [9] Fintech Expansion - MercadoLibre is advancing its fintech strategy with Mercado Pago, which has reached 72 million monthly active users (MAUs) and over 27 million credit users, indicating strong customer engagement [11][12] - The digital banking strategy is gaining momentum through the adoption of the Mercado Pago credit card and expanding credit services, enhancing customer retention and cross-sell opportunities [12] Logistics Efficiency - The company is leveraging logistics scale to achieve structural cost advantages, with an 8% sequential reduction in unit shipping costs in Brazil and over 12% year-over-year reduction in Mexico [13][14][16] - Continued investments in automation and network optimization are expected to enhance efficiency and lower fulfillment costs, contributing to long-term growth [16] Earnings Estimates - The Zacks Consensus Estimate for first-quarter 2026 earnings is $13.53 per share, indicating a year-over-year growth of 38.91%, while revenues for the same period are projected at $8.07 billion, suggesting a growth of 35.93% [17][18] Investment Outlook - Despite the premium valuation and near-term volatility, MercadoLibre's fintech momentum, logistics scale, and earnings trajectory support a stable long-term growth narrative [19]

Core Insights - Alibaba Group (BABA) is significantly increasing its investment in artificial intelligence, but this aggressive spending is raising concerns about its near-term profitability as evidenced by its recent earnings report [1][7] Financial Performance - The company reported non-GAAP earnings of 61 cents per ADS for Q2 fiscal 2026, missing the Zacks Consensus Estimate by 7.58% [1] - Non-GAAP diluted earnings in domestic currency were RMB 4.36, reflecting a 71% year-over-year decline, despite a 5% increase in revenues to RMB 247.8 billion [1] - Capital expenditures surged 80% year-over-year to RMB 31.9 billion ($4.5 billion), resulting in negative free cash flow of RMB 21.8 billion, a reversal from a RMB 13.7 billion inflow a year ago [2] - Adjusted EBITDA fell 78%, with the margin dropping from 17.4% to 3.7% [2] Investment Strategy - Alibaba is committed to spending at least RMB 380 billion on AI and cloud initiatives over three years, having already invested RMB 120 billion [3] - The company is expanding its AI footprint through various projects, including the open-source RynnBrain robotics model and integrating AI across its platforms [3] Competitive Landscape - Other tech giants are also ramping up their capital expenditures, with Amazon projecting approximately $200 billion for 2026 and Alphabet guiding $175-$185 billion, both focusing on AI and cloud services [4] - Unlike Alibaba, Microsoft and Google are maintaining robust profitability, which provides them with a financial cushion for their investments [4] Stock Performance and Valuation - BABA shares have increased by 29.5% over the past six months, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector, which saw declines of 9.1% and 0.7%, respectively [5] - The Zacks Consensus Estimate for fiscal 2026 earnings is $5.96 per share, indicating a 33.85% year-over-year decline [10] - BABA stock is currently trading at a forward 12-month price/sales ratio of 2.42X, compared to the industry's 1.91X, and has a Value Score of F [11]

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]

Core Insights - Fiverr International (FVRR) shares have decreased by 34.1% over the past six months, underperforming the Zacks Retail-Wholesale sector's 5.3% return and the Zacks Internet – Commerce industry's 2.4% appreciation [1] - The company's underperformance is attributed to a challenging macroeconomic environment affecting small and medium-sized business spending and a transitional phase focusing on higher-value projects and AI capabilities [1] Financial Outlook - For 2025, FVRR anticipates revenues between $428 million and $436 million, indicating a year-over-year growth of 9% to 11%, with an adjusted EBITDA margin of approximately 21% [2][9] - The Zacks Consensus Estimate for 2025 earnings is projected at $2.9 per share, reflecting a year-over-year growth of 21.85% [7][9] AI and Market Positioning - FVRR is strategically positioned at the intersection of AI adoption and specialized talent demand, investing in AI-native teams and enhancing its marketplace capabilities [5] - The Programming and Tech vertical reported a year-over-year growth of 14% in Q3 2025, with AI development services experiencing a remarkable growth of 199% year over year [6] Competitive Advantages - FVRR's Dynamic Matching and Managed Services leverage AI to support complex, higher-value projects, creating a recruiting-like experience and enabling competition for enterprise-level work [10] - The company is trading at a forward price-to-sales multiple of 1.31x, which is below the industry average of 2.23x and the sector average of 1.76x, indicating a compelling valuation compared to peers [11] Market Dynamics - FVRR is experiencing a shift towards more complex, higher-value engagements, with transactions over $200 now representing over 50% of marketplace GMV [13] - Active buyer counts have declined from 3.7 million to 3.3 million year over year, as customers seeking basic services find alternatives, while those pursuing complex work deepen engagement [14] Conclusion - FVRR is well-positioned in the expanding AI services market, with proprietary capabilities creating competitive differentiation and favorable valuation metrics [15] - The transition towards upmarket clients presents near-term challenges, as declining active buyers reflect structural headwinds from AI-driven displacement of lower-value transactions [15]

Core Insights - Amazon.com (AMZN) is increasingly focusing on emerging markets as a key growth driver, with international operations still underpenetrated compared to North America, but showing strong demand for e-commerce, digital payments, and cloud services [1][2] Group 1: Growth Potential in Emerging Markets - Emerging market fundamentals favor Amazon's growth, with rising smartphone penetration, expanding middle-class populations, and improving digital payment infrastructure supporting e-commerce adoption [2] - In Q3 2025, Amazon's international segment generated $40.9 billion in revenues, reflecting a 10% year-over-year growth, excluding foreign exchange [2] - The Zacks Consensus Estimate for Amazon's international revenues in fiscal 2026 is $160.51 billion, representing a 12.31% year-over-year increase, indicating strong growth potential from emerging markets [4][9] Group 2: Competitive Advantages - Amazon's operational improvements, such as reduced inbound lead times and enhanced fulfillment efficiency, provide scalable solutions for emerging market logistics challenges [3] - Amazon's diversified business model across e-commerce, cloud infrastructure, and advertising offers revenue streams that competitors like Sea Limited and MercadoLibre cannot replicate [6] - Amazon's established logistics network and operational discipline support sustained profitability, contrasting with the challenges faced by regional competitors [6] Group 3: Market Position and Valuation - Amazon's shares have returned 1.5% over the past six months, underperforming compared to the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector [7] - The stock appears overvalued, trading at a forward 12-month price/earnings ratio of 29.01X, higher than the industry's 24.95X, with a Value Score of D [10] - The Zacks Consensus Estimate for Amazon's 2025 earnings is $7.17 per share, indicating a 29.66% increase from the previous year [12]

Core Insights - Alibaba (BABA) is focusing on quick commerce as a significant growth driver, with revenues increasing by 60% year-over-year in Q2 of fiscal 2026, attributed to strong order momentum and the expansion of Taobao Instant Commerce [1][9] - The company is facing challenges in profitability due to heavy spending on subsidies, logistics, and user experience, particularly in the China e-commerce segment, which saw EBITA decline by 76% year-over-year in Q2 of fiscal 2026 [2][9] - Sales and marketing expenses have surged to nearly 27% of revenues, reflecting intense competition in the instant delivery and local commerce markets, while cash flow has deteriorated due to ongoing investments in quick commerce [3][9] Financial Performance - The adjusted EBITA is expected to fluctuate in the coming quarters due to high competition and investment levels, indicating that margin pressure may persist longer than anticipated [4] - BABA shares have increased by 37.5% over the past six months, outperforming the Zacks Internet – Commerce industry growth of 3.1% and the Zacks Retail-Wholesale sector growth of 6.4% [7] - The current forward 12-month Price/Earnings ratio for BABA is 20.04X, compared to the industry's 24.97X, with a Value Score of F [11] Competitive Landscape - JD.com poses significant competition to Alibaba with a self-operated, price-competitive model, achieving a revenue growth of 14.9% to RMB299.1 billion in Q3 of 2025, despite higher logistics costs [5] - PDD Holdings intensifies competition through a low-cost, social commerce model, demonstrating strong revenue growth and net income gains, which pressures Alibaba's core platforms [6] Earnings Estimates - The Zacks Consensus Estimate for fiscal 2026 earnings is $6.10 per share, reflecting a 32.3% year-over-year decline and a 5% decrease over the past 30 days [14]

Core Insights - Alibaba's cash flow strain highlights risks in its expansion-led strategy, with a widening gap between revenue growth and cash generation [2][10] - Heavy investments in AI and cloud infrastructure are a major contributor to cash flow pressure, with approximately RMB120 billion spent on capital expenditures over the past four quarters [3][10] - The company's rapid push into quick commerce boosts revenues but negatively impacts margins due to logistics costs and high customer acquisition spending [3][4] Financial Performance - Alibaba's September quarter results showed a significant drop in operating cash flow and a large free cash flow outflow, indicating the capital-intensive nature of its current expansion phase [2][10] - The Zacks Consensus Estimate suggests limited mid-single-digit revenue growth of 5.75% in fiscal 2026, raising concerns about the long-term viability of its strategy [5] Competitive Landscape - JD.com demonstrates stronger cash flow management through a supply-chain-focused model, achieving solid revenue growth and improved retail margins despite heavy logistics investments [6] - PDD Holdings utilizes an asset-light marketplace model, generating strong operating cash flow and maintaining a large cash balance, which provides financial flexibility [7] Valuation Metrics - Alibaba's stock is currently trading at a forward Price/Earnings ratio of 19.13X, lower than the industry's 25.48X, indicating a potential undervaluation [12] - The Zacks Consensus Estimate for fiscal 2026 earnings is $6.42 per share, reflecting a 28.8% year-over-year decline [15]

Core Insights - Alibaba (BABA) is facing ongoing challenges in its core e-commerce operations despite a strategic shift towards artificial intelligence investments [2] - The company reported a 5% year-over-year revenue growth to RMB247.8 billion in Q2 FY26, but profitability metrics have significantly deteriorated [2][9] Financial Performance - Non-GAAP earnings fell 71% year-over-year to RMB4.36 per American Depositary Share, underperforming analyst expectations by approximately 20% [3] - Operating income dropped 85% from RMB35.2 billion to RMB5.4 billion, indicating severe margin compression due to strategic investments [3] Competitive Landscape - The China commerce segment is experiencing heightened competition from PDD Holdings, ByteDance's Douyin, and JD.com, leading to costly defensive strategies for Alibaba [4] - Local e-commerce revenues grew 16% in Q2 FY26, supported by government consumption stimulus, but this growth necessitated increased marketing expenditures and aggressive subsidies [4] Strategic Investments - Alibaba announced plans to expand its instant commerce infrastructure through its Cainiao logistics arm, with new or expanded warehouses in 31 cities by January 2026 [5] - The company reported negative free cash flow of RMB21.8 billion last quarter, driven by an 80% year-over-year increase in capital spending, raising concerns about sustaining investments in AI and logistics [5] Rival Developments - Amazon has rapidly expanded its quick commerce operations, establishing over 300 micro-fulfillment centers in India, with a 25% month-over-month growth in daily orders since September 2025 [6] - JD.com surpassed 700 million annual active customers, achieving significant growth in its JD NOW instant retail platform, contrasting with Alibaba's mounting losses [7] Market Positioning - Both Amazon and JD.com face similar infrastructure cost pressures as Alibaba but are better positioned to absorb these expenses due to stronger profitability and disciplined capital allocation [8] - Alibaba's stock has surged 30.3% over the past six months, outperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector [10] Valuation Metrics - Alibaba's stock is currently trading at a forward 12-month price/sales ratio of 2.23X, compared to the industry's 2.14X, with a Value Score of D [13] - The Zacks Consensus Estimate for fiscal 2026 earnings is projected at $6.42 per share, indicating a 28.7% year-over-year decline [16]