We got here throughout a bullish thesis on Alibaba Group Holding Restricted on Compounding Your Wealth’s Substack by Sergey. On this article, we are going to summarize the bulls’ thesis on BABA. Alibaba Group Holding Restricted’s share was buying and selling at $135.59 as of March third. BABA’s trailing and ahead P/E have been 18.69 and 15.65 respectively based on Yahoo Finance.
Alibaba Group Holding Restricted, by means of its subsidiaries, offers expertise infrastructure and advertising attain to assist retailers, manufacturers, retailers, and different companies to interact with their customers and clients within the Individuals’s Republic of China and internationally.
BABA delivered sturdy income progress in its September 2025 quarter, with whole income reaching RMB 247.8 billion, up 15% 12 months over 12 months, pushed by sturdy performances in China e-commerce (+16%) and cloud intelligence (+34%). Exterior cloud income rose 29%, and AI-related merchandise now account for over 20% of exterior cloud gross sales, highlighting the corporate’s rising presence in superior applied sciences.
Fast commerce additionally surged 60%, reflecting Alibaba’s aggressive push into quicker supply and ecosystem growth, though this got here at a price. Profitability, nonetheless, weakened sharply, with GAAP web revenue declining 53% to RMB 20.6 billion, working money movement falling to RMB 10.1 billion, and free money movement turning damaging at RMB –21.8 billion attributable to substantial investments in AI and fast commerce initiatives. Regardless of these pressures, the corporate has achieved a 50% discount in per-order losses since mid-summer, signaling enhancing operational effectivity in its high-growth segments.
Alibaba’s aggressive positioning stays sturdy, significantly in China’s e-commerce and AI cloud, the place administration claims market share exceeding the mixed subsequent three opponents. The corporate faces challenges, together with capital depth, margin compression, and uncertainty across the timing of returns on AI CapEx, however administration is prioritizing long-term ecosystem progress over near-term earnings.
As investments mature and scale advantages materialize, profitability is anticipated to recuperate, creating a possible rerating alternative. For buyers, the mixture of market-leading positions in key progress areas and vital AI-driven growth offers a sexy threat/reward dynamic, with income progress and strategic initiatives prone to unlock worth regardless of short-term margin strain.
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