Alibaba Group (BABA) is currently trading at a forward 12-month price-to-sales ratio of 1.64, exceeding the Zacks Retail-Wholesale sector’s average of 1.42. Year-to-date, BABA shares have declined by 18.6%, in contrast to the industry’s growth of 3.4%. This valuation gap has prompted investor debates regarding the stock’s place in growth portfolios.
Alibaba’s cloud revenue growth in the recent quarter reached a multi-year high, with AI-related product revenues experiencing triple-digit growth for 12 consecutive quarters, now representing over one-third of external cloud revenues. The company’s capital expenditure is focused on a defined, multi-year AI infrastructure plan, which is anticipated to provide significant long-term returns. The Zacks Consensus Estimate predicts earnings of $6.87 per share for fiscal 2027, indicating a 76.61% year-over-year growth.
Despite challenges in quick commerce affecting near-term profitability, Alibaba plans to unify its e-commerce platforms and continues to adapt its strategies to new consumer patterns. Management expects cloud revenue and EBITDA margins to improve in the coming quarters, with ongoing investments laying the groundwork for future growth.
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