Alibaba Group Holding Limited (BABA) has returned to the spotlight after reports from China, first appeared on chinastarmarket.cn, suggest Tesla (TSLA) has started testing its flagship artificial intelligence (AI) model, Qwen, inside the company's infotainment system. Although neither company has verified the reports, investors embraced the conjecture, with Alibaba’s shares up 9% in the last five trading sessions.
The software reportedly handles voice commands, navigation and basic vehicle functions. The reported roadmap extends well beyond voice assistance. Qwen could process complex voice requests, manage multiple tasks simultaneously, support end-to-end services such as ordering and payments, and power content, lifestyle, and commerce features through a cloud-based architecture.
Nothing has become official, though. Tesla could still continue using ByteDance's Doubao, which already powers Chinese Model 3 and Model Y vehicles. Even so, reports like these keep Alibaba firmly on investors' radar. So, let us see what’s next for the company.
About Alibaba Stock
Headquartered in Hangzhou, China, Alibaba has built one of the world's largest technology ecosystems. The company has its hands in e-commerce, cloud computing, logistics, digital media, mapping, healthcare, local services and several other technology-driven businesses.
With a market cap of $309.2 billion, its platforms connect millions of merchants and brands with consumers across China and international markets through Taobao, Tmall, AliExpress, Lazada and Alibaba Cloud.
Alibaba's stock is down 11.36% year-to-date (YTD), weighed down by increased AI spending, e-commerce losses, and sluggish consumer demand in China. Nonetheless, shares have risen 35.14% in the last month, boosted by robust cloud growth, lessening legal concerns, and, most importantly, reports regarding Tesla’s testing Qwen.
From a valuation standpoint, BABA stock is trading at 19.66 times forward adjusted price-to-earnings along with 1.77 times forward sales. Both metrics remain above the industry averages, placing a premium value on the company’s stock compared with many of its peers.
Alibaba also pays an annual dividend of $1.03 per share, giving the stock a dividend yield of 0.81%. Moreover, the company paid its latest quarterly dividend of $1.03 per share on July 13 to shareholders of record as of June 11.
A Closer Look at Alibaba’s Q4 Earnings
Alibaba released its Q4 FY2026 results on May 13, sending the stock up 8.2% after the earnings announcement. Revenue increased 2.9% from the same quarter last year to $35.3 billion as domestic commerce remained resilient, international operations held steady, and cloud demand continued gathering strength.
Alibaba China E-commerce Group once again generated the largest share of revenue. The division produced $17.7 billion after recording 6% year-over-year (YOY) growth. Alibaba International Digital Commerce Group also delivered another solid quarter. Revenue rose 5.5% from the previous year’s quarter to $5.1 billion.
Cloud Intelligence Group produced the strongest growth across the company. Revenue surged 38.2% YOY to $6 billion. AI products remained the biggest driver, with revenue delivering triple-digit growth for the seventh consecutive quarter as more enterprise customers adopted Alibaba's cloud computing and AI solutions.
However, revenue growth did not translate into higher profitability because Alibaba continued investing heavily in AI infrastructure, cloud capabilities and commerce initiatives. Those investments resulted in an operating loss of $123 million.
Looking forward, management reiterated that these strategic investments remain firmly focused on strengthening Alibaba's competitive position across AI and cloud computing, where expanding commercialization and sustained customer demand continue to create long-term growth opportunities.
On the other hand, analysts expect Q1 FY2027 EPS to decline 6.4% from the previous year to $1.77. Expectations improve considerably beyond that quarter. Analysts forecast full-year FY2027 EPS of $6.31, representing growth of 95.4% from the previous year, while FY2028 EPS is projected to increase 42% YOY to $8.96.
What Do Analysts Expect for Alibaba Stock?
Wall Street is bullish on Alibaba, assigning the stock an overall rating of “Strong Buy.” Among 26 analysts covering the name, 21 recommend “Strong Buy,” one suggests “Moderate Buy,” while four advise investors to “Hold” the shares.
Price targets have also moved higher. The average price target stands at $182.55, implying an upside of 41% from current levels. Meanwhile, the Street-High target of $220.10 suggests a potential gain of 70%.
On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
