Alibaba (BABA): Is This China E-Commerce Giant Ready for a Comeback?

Alibaba (BABA) has been one of the most talked-about Chinese stocks over the past few years, but not always for the right reasons. From regulatory crackdowns to slowing economic growth in China, investors have been hesitant to bet on a strong comeback. However, recent signs suggest that the tide might be turning.

Global investors have started shifting capital back into China’s markets, driven by easing regulatory concerns, improving economic policies, and attractive valuations. The Chinese government has also taken a more supportive stance toward its domestic tech sector, which could remove some of the uncertainties that have weighed on Alibaba’s stock.

Additionally, China’s consumer spending is gradually recovering, and Alibaba’s massive ecosystem of e-commerce, cloud computing, and logistics makes it well-positioned to benefit from this resurgence. With Alibaba stock still trading at a significant discount compared to its highs, the question is: Is now the time to reconsider Alibaba as an investment?

Alibaba’s Fundamentals: Growth & Challenges

Alibaba’s core e-commerce platforms, Taobao and Tmall, remain at the heart of China’s online shopping ecosystem. Despite rising competition from Pinduoduo and JD.com, Alibaba still holds a dominant market share.

• Taobao (consumer-to-consumer) continues to attract millions of small businesses and individual sellers.

• Tmall (business-to-consumer) is still the go-to platform for premium brands looking to tap into China’s consumer base.

One of the biggest challenges, however, has been China’s shifting consumer spending habits. Post-pandemic, shoppers are more value-conscious, leading to increased demand for budget-friendly alternatives. Alibaba has responded by expanding its discount-driven strategies and enhancing logistics capabilities to stay ahead of the competition.

Cloud Computing: A Key Driver of Future Growth

Alibaba’s cloud computing division (Alibaba Cloud) is another major pillar of its business. The company is the largest cloud service provider in China and one of the key players globally.

Why does this matter? Cloud computing is one of the fastest-growing industries, and Alibaba Cloud plays a crucial role in powering AI applications, enterprise solutions, and digital transformation initiatives across various industries.

That being said, growth has slowed in recent quarters as businesses in China tighten their tech spending. However, as AI adoption continues to expand and companies increase their reliance on cloud-based services, Alibaba Cloud remains a major long-term growth driver for the company.

Regulatory Environment: Is the Worst Behind Alibaba?

One of the biggest reasons for Alibaba’s stock decline over the past few years has been China’s regulatory crackdown on big tech. From antitrust fines to stricter data security laws, Alibaba has faced significant headwinds.

However, recent developments suggest that the worst may be over. The Chinese government has signaled a more business-friendly approach, recognizing that its tech giants are crucial to economic growth.

While regulatory risks haven’t disappeared completely, Alibaba’s ability to adapt and comply with new policies has helped rebuild investor confidence. If this trend continues, it could remove a major overhang on the stock.

Alibaba’s Technical Outlook

Alibaba’s stock has seen significant volatility in recent months, but there are some key technical levels that traders and investors should keep an eye on:

• Uptrend reversal playing out with 20d MA crossing above both longer term MAs in mid-Feb, still heading upwards

• Both longer term trends (100d and 200d MA) are starting to slope up gently

• Immediate psychological support looks to be around 120, which is where the current trailing support resides

• There are 2 consecutive 1GT bullish signal with no exit signals yet

• As long as price is able to hold firmly above the 120 psychological support level, potential upside target towards 160 first before seeing some selling pressure return

Final Thoughts: Is Alibaba a Buy Right Now?

Alibaba remains a powerhouse in China’s e-commerce and cloud computing sectors, with significant long-term growth potential. The improving regulatory landscape and renewed investor interest in China stocks could provide the catalyst for a potential turnaround.

However, challenges remain—economic uncertainty, consumer spending shifts, and competition from rivals like Pinduoduo are factors investors should consider.

For long-term investors willing to ride out near-term volatility, Alibaba could offer compelling value at current levels. That said, keeping an eye on both fundamental and technical signals is crucial before making an investment decision.

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Sources:
1.Alibaba Group Announces December Quarter 2024 Results. Available at: https://www.alibabagroup.com/en-US/document-1828621437708009472 
2. Alibaba’s Core Businesses Reignite Growth as AI Strategy Delivers Strong Results. Available at: https://www.alibabagroup.com/en-US/document-1829382981584683008 
3. Alibaba Completes Three-Year Regulatory Overhaul After Antitrust Fine. Available at: https://www.morningstar.com/news/dow-jones/202408302729/alibaba-completes-three-year-regulatory-overhaul-after-antitrust-fine 
4. Alibaba's AI-Powered Turnaround. Available at: https://www.forbes.com/sites/greatspeculations/2025/02/24/alibabas-ai-powered-turnaround/ 

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