Alibaba stock (NYSE: BABA) climbed 4% in premarket trading on Friday after the company posted its first-quarter 2026 results.
The numbers were a touch under Wall Street forecasts on revenue and profit, but investors zeroed in on the bright spots: strong momentum in cloud and AI, plus signs that e-commerce is picking up again.
It’s a sharp swing from the prior session, when shares slipped, only to rebound once traders dug into the details beyond the headline miss.
Alibaba stock: What’s behind bullish momentum?
Driving today’s rally was Alibaba’s Cloud Intelligence Group, which posted a 26% jump in revenue to $4.66 billion.
The unit is riding a wave of demand for generative AI computing and infrastructure, with AI product sales growing at triple-digit rates for the eighth straight quarter.
Investors also pointed to Alibaba’s $53 billion, three-year push into AI and cloud, including a new in-house inference chip aimed at boosting resilience as tech nationalism rises as a key edge.
The cloud business is cementing Alibaba’s lead in Asia’s AI market, attracting more enterprise clients and lifting external revenue.
While heavy spending is weighing on margins, the strong top-line growth suggests plenty of operating leverage as adoption widens.
Alibaba’s main China e-commerce arm delivered a 10% revenue jump to $19.55 billion, lifted by Taobao Instant Commerce and strong seasonal campaigns like the 6.18 Shopping Festival.
Engagement climbed, take rates improved, and monthly active users rose 25%, showing resilience despite weak consumer sentiment and tough competition.
International commerce grew 19% as cross-border business improved and operations became more efficient.
Still, heavy spending on discounts as part of an ongoing “food war” with Meituan and JD.com pressured profits: EBITA slid 14% and adjusted net income dropped 18% as Alibaba pushed harder into quick commerce and user growth.
Overall net income surged 76%, though most of that came from gains on equity holdings and the sale of Trendyol’s consumer unit.
What analysts say?
Analysts remain broadly positive on Alibaba stock, though many have lowered price targets after softer guidance and revenue shortfalls.
Barclays, BofA Securities, and Mizuho still rate the stock “Overweight” or “Buy,” but have trimmed 12-month targets to between $135 and $176, citing margin pressures in the near term.
Even so, many see stabilization in Alibaba’s core e-commerce and cloud units, and with ongoing share buybacks, the stock is viewed as inexpensive and attractive for long-term investors.
Analysts also point to Alibaba’s strong balance sheet and steady pipeline of new products as key supports for the stock.
The company is seen as well placed to benefit from trends like generative AI, which could open fresh revenue streams and eventually lift margins.
While competition and heavy spending have squeezed profits in the near term, the broader view is that Alibaba is shifting from a pure e-commerce player into a diversified tech group, a transition expected to drive growth and create long-term value for shareholders.
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