Alibaba (BABA) Stock: Why I'm Setting a $125 Price Target as AI Cloud Growth Accelerates

With AI cloud revenue growing 45%, could Alibaba's technology expansion unlock a new chapter of earnings growth?

Ask Warren HQ | Independent Market Research | November 3, 2026

Alibaba Group Holding Limited (NYSE: BABA) is attracting renewed attention as its artificial intelligence and cloud computing businesses emerge as important drivers of future growth. While Alibaba remains one of China's largest e-commerce companies, I believe its expanding AI infrastructure business could play an increasingly important role in determining the stock's long-term valuation. Shares closed at $101.50 on November 2, well below their 52-week high, reflecting investor concerns about Chinese economic conditions, competition and the costs associated with developing advanced technology infrastructure. However, Alibaba's latest financial results suggest that its cloud operations are gaining meaningful commercial momentum. With artificial intelligence adoption accelerating and the company investing heavily in computing capacity, I believe the market may be undervaluing the long-term earnings potential of this business. Consequently, I am establishing an initial BUY (Speculative) rating and a 12-month price target of $125.00, reflecting my cautiously optimistic outlook for Alibaba's technology-driven growth.

My financial justification for the $125 price target begins with Alibaba's accelerating cloud business and its ability to monetize growing demand for artificial intelligence services. In the quarter ended June 30, 2026, Alibaba reported total revenue exceeding $39.6 billion, representing approximately 9% year-over-year growth. More importantly, its AI Cloud and Compute Services revenue reached approximately $7.1 billion, increasing 45% from the previous year. AI-related product revenue also delivered triple-digit growth for the twelfth consecutive quarter, demonstrating sustained demand for the company's expanding technology platform. Cloud segment adjusted EBITA increased 133% to approximately $830 million, with margins improving to roughly 12%. I view this combination of revenue acceleration and improving profitability as particularly encouraging because it suggests that Alibaba's investments in artificial intelligence are beginning to generate meaningful financial returns. At the same time, its established e-commerce operations provide substantial scale and an existing customer ecosystem. My $125 valuation represents approximately 23% appreciation from the November 2 reference price, reflecting a moderate recovery scenario in which cloud profitability continues improving while the company's broader retail operations remain relatively stable. I am not assuming that every AI investment will succeed, and I recognize that additional infrastructure spending could constrain free cash flow.

My final assessment is BUY (Speculative), with a 12-month price target of $125.00. I believe Alibaba offers an attractive combination of established e-commerce operations, accelerating cloud revenue and growing exposure to artificial intelligence infrastructure. I would consider raising my target if the company sustains strong cloud growth, expands operating margins, improves free cash flow or demonstrates that AI-related demand is producing durable earnings growth. Conversely, weaker Chinese consumer spending, escalating competition, regulatory intervention, geopolitical tensions or unexpectedly high capital expenditures could lead me to reduce my valuation. I will also monitor Alibaba's upcoming quarterly earnings for evidence that cloud momentum is translating into stronger consolidated profitability. Although the stock carries risks that are less pronounced in some U.S.-based technology companies, I believe its current valuation offers a potentially favorable opportunity for investors willing to tolerate uncertainty. The central question guiding my outlook is whether Alibaba's rapidly expanding AI business can become powerful enough to reshape the market's valuation of the entire company.

Ask Warren HQ | Independent Market Research

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Research References: Alibaba August 2026 Financial Highlights | Alibaba June Quarter 2026 Results — SEC | Alibaba Investor Relations

This article represents my independent market research and opinions published through Ask Warren HQ for educational and informational purposes only. My stock ratings and price targets are estimates, not guarantees of future performance or personalized investment advice. Financial information reflects available data as of November 3, 2026, and may change. Readers should verify current information and conduct their own due diligence before making investment decisions. Please review the Disclaimer, Privacy Policy & Terms of Use.