Is Alibaba Stock a Buy Right Now?
Key Points
Alibaba has been striving to evolve beyond just its e-commerce business.
Its AI-driven Qwen app has 300 million monthly active users now.
But expensive investments have led to a sharp decline in operating income.
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Alibaba Group (NYSE: BABA) doesn't want to be known as just an e-commerce giant any longer. Throughout 2025, the Chinese company leaned into its ambitions to become a cloud and artificial intelligence leader. The most recent quarterly results, however, paint a complicated picture of a business that's thriving in some ways, but uncertain in others.
Leaning into the cloud
Alibaba's cloud intelligence line grew by 36% in this latest quarter compared to the same period last year. Overall, though, Alibaba reported a 66% year-over-year decline in net income. The steep drop is mostly attributed to a strategic pivot into technology investments, improved user experiences, and quick commerce.
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The main question, however, is whether Alibaba is too late in its efforts to catch up as a leader in AI and cloud services. Yes, a 36% increase in its cloud business this past quarter is promising, but there's real concern regarding the e-commerce side. Most problematic is the 74% year-over-year decline in operating income. The compression in the company's profits is real, and it's making shareholders nervous.
Image source: Getty Images.
Alibaba is going all-in on AI and cloud intelligence. The company's Qwen app is a globally competitive AI personal assistant. Since the company launched a new and improved version in early February, approximately 140 million Qwen users have experienced their first AI-driven shopping experience. The app boasts more than 300 million monthly active users across all of its platforms.
Investors aren't so sure yet
Overall, Alibaba missed Wall Street's expectations, and shares listed in the U.S. fell about 7% following the release. So far in 2026, Alibaba's stock price has decreased by more than 15%.
For investors searching for an inexpensive entry point, Alibaba is attractively priced right now. Its current forward P/E ratio has dropped to just 13. Its PEG ratio is now 1.59. Both metrics suggest Alibaba is either fairly priced or even slightly undervalued.
Is Alibaba a buy right now?
If you believe Alibaba can fully catch up in agentic AI, buying the stock now might be a no-brainer. For investors like me, who are a bit more wary due to geopolitical and execution risks, these most recent earnings make me want to take a more wait-and-see approach.
There's reason to believe Alibaba can pull off this strategic move into a broader technology platform, but it's going to be hugely expensive in the short to intermediate term, and not without intense competition in both China and abroad.
Should you buy stock in Alibaba Group right now?
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
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