Alibaba stock’s AI-powered run isn’t done

Shares of Alibaba Group Holding have jumped some 77% since Barron’s recommended them last fall. While the stock might not rally at such breakneck speed going forward, it appears poised to keep climbing—especially since it doesn’t look too pricey. China’s determination to stand on equal AI footing with the U.S. is a major factor in the stock’s favor, as Alibaba is pushing to be a central player in the country’s ongoing AI and cloud adoption.

On Wednesday, Alibaba released a flurry of updates that sent its American depositary shares higher. The company plans to boost its AI spending, open new data centers across Asia, Europe, and North and South America—while also unveiling its largest AI language model on record, Qwen3-Max, with more than a trillion parameters. The company is also partnering with Nvidia to integrate the superstar chip maker’s products into tools like robots and self-driving cars.

Many on Wall Street like what they’re seeing, with nearly 90% of analysts tracked by FactSet bullish on Alibaba.

Citigroup’s Alicia Yap reiterated a Buy rating on the stock following the latest AI announcement. She also boosted her price target for Alibaba’s ADRs to $217 from $187 to account for her more optimistic revenue estimates for its cloud division.

“Being one of the five to six global super cloud platforms with full-stack AI services, we believe Alibaba is well-positioned to capture the artificial superintelligence evolution," she wrote.

It’s not just that Alibaba is seeing so many technological advances. Rather, it’s becoming an integrated one-stop shop for AI and cloud services, emulating major Western players’ full-stack model, which means they’re in control of the process and development from start to finish.

“Alibaba will build Alibaba Cloud into a full-stack AI service provider, similar to what we see with Amazon Web Services/Google Cloud Platform, including the compute layer to power AI training/inference and offering proprietary open-source models within its own cloud environment," writes Baird analyst Colin Sebastian,

He has an Outperform rating on Alibaba, and raised his price target to $174 from $153 on Wednesday.

Perhaps even more importantly, however, Alibaba’s recent winning streak and announcements show that it’s no longer on the outs with Beijing. China has shown that it is committed to rivaling the U.S. when it comes to AI capabilities. As Barron’s notes, the fact that Alibaba has been able to notch so many AI victories suggests that it has done so with the Chinese government’s blessing.

Although China’s chip capabilities are rapidly advancing, Nvidia chips are still the gold standard in many cases. Therefore, Alibaba’s Nvidia partnership likely required government approval, considering the company passed over domestic semiconductor companies, Gavekal analyst Tilly Zhang noted. That suggests China potentially “has more regulatory flexibility" when it comes to promoting AI evolution, she adds, with Alibaba at the forefront.

Of course, investing in Chinese companies will always take some leap of faith: Government favor can change and other corporate information may not be readily forthcoming, leading to valuation gaps.

Nonetheless, with Alibaba’s ADRs changing hands for just over 17 times the next fiscal year’s expected earnings, it looks worth the risk. It goes without saying they are far less expensive than even the cheapest of the Magnificent Seven—Google parent Alphabet and Facebook parent Meta Platforms trade in the mid-20 times range.

There are other legitimate worries, however. The Zephirin Group analyst Lenny Zephirin, an Alibaba bear, argues that U.S. tech companies’ spending and advancement still far outstrip those of China, meaning the upside for Alibaba has been exaggerated.

Still, as long as the company is increasingly backed by Beijing—and the tech halo extends beyond the U.S.—the shares are likely to keep outperforming while the AI trade dominates.

Alibaba may never be on par with U.S. tech companies in a number of metrics. Yet it doesn’t need to be for its stock to keep winning.