Alibaba Stock Doubles YTD, Analyst Raises Target Higher on Cloud Optimism

Alibaba Group Holding Limited (NYSE:BABA) has seen its stock price surge, doubling year-to-date with gains of 112.47%, driven by strong financial performance and strategic investments. This impressive growth has prompted analysts to revise their outlook, signaling further potential upside for the e-commerce giant.

JPMorgan analyst Alex Yao increased the firm's price target on Alibaba to $245 from $170, reiterating an “Overweight” rating. This upward revision is attributed to Alibaba's better-than-expected cloud revenue growth in the second quarter and management's confident stance on investments in food delivery and quick commerce initiatives. Following the Apsara conference, JPMorgan expressed increased optimism regarding AliCloud's future revenue potential from external clients and its synergistic relationship with domestic e-commerce operations.

Alibaba has significantly ramped up its investments in artificial intelligence (AI), exceeding its initial $50 billion allocation. This enhanced commitment to AI development aims to position Alibaba as a leader in China's response to substantial AI investments by U.S. tech companies. The announcement spurred a notable increase in Alibaba's stock value, reaching a four-year high with a 10% surge in Asia and a 9% rise on Wall Street. Further solidifying its AI strategy, Alibaba partnered with Apple in February 2025 to integrate its AI features into iPhones sold in China, enhancing Apple's competitiveness in the crucial Chinese market. This collaboration led to a 9% increase in Alibaba's Hong Kong-listed shares, reaching levels unseen since January 2022.

The company's financial performance in the quarter ending December 2024 demonstrated robust growth, with an 8% increase in revenue, reaching 280.2 billion yuan ($38.38 billion), marking the fastest growth in over a year. Net income also saw a significant surge to 48.9 billion yuan ($6.71 billion). Alibaba plans substantial investments in AI and cloud computing over the next three years, with the goal of developing artificial general intelligence (AGI). The cloud business experienced a 13% growth, while the international commerce unit saw a 32% increase in revenue.

To further support its international growth and cloud computing services, Alibaba announced plans to raise $3.2 billion through a zero-coupon convertible bond in September 2025. Approximately 80% of these funds will be allocated to expanding data centers, upgrading technology, and enhancing cloud services, while the remainder will be used to improve e-commerce efficiency and expand its global market presence.

Analysts remain optimistic about Alibaba's future growth trajectory. Revenue for fiscal year 2026 is projected to reach $148.43 billion, representing a 7.37% increase from 2025. Non-GAAP EPS is expected to rise to $9.89, a 9.02% year-over-year growth. Current analyst ratings reflect a strong buy recommendation for the stock, with a consensus price target of $162.73, suggesting a potential upside of 33.52% from current levels.