Alibaba: Why 2025 Could Mark a Long-Term Turning Point

Alibaba Group Holding Limited (BABA) has shown resilience through volatile market cycles. From rapid expansion between 2015 and 2020 to regulatory headwinds in 2021–2022, the company has navigated growth and setbacks. Recent price action signals a strong bottom formation, supported by improving fundamentals.

Financial results for fiscal 2025 confirm a recovery in revenue, operating income, and net earnings. With rising AI investments, robust buybacks, and attractive valuation, Alibaba stands at a potential turning point. This article explores its growth journey, including fundamental and technical analysis, to help investors understand the buying opportunities.

The Growth Story of Alibaba

Long-Term Growth and Major Turning Points

Alibaba has demonstrated strong long-term growth, despite experiencing significant price volatility in its stock. The monthly chart below highlights key turning points in Alibaba’s price history.

The stock formed a major bottom in September 2015 at $57.20 and began a strong rally from that level. Following this rebound, Alibaba reached a high of $206.20 in January 2018. After a period of consolidation, it posted another high in October 2020 at $319.32.

The strong price surge in Alibaba from 2015 to 2020 was driven by robust revenue growth and rapid expansion across e-commerce, cloud computing, and digital services. The company gained market share in China’s booming online retail sector.

Investor confidence grew as Alibaba consistently beat earnings expectations. Its successful Singles’ Day sales each year also boosted sentiment. Additionally, the company’s listing in Hong Kong in 2019 attracted more global capital. This combination of strong fundamentals and strategic moves drove the stock to new highs by 2020.

Alibaba Stock Recovery After Regulatory Pressure

After peaking in October 2020, the stock declined sharply and reached a bottom at $58.01 in October 2022. This bottom aligned with the long-term support zone between $57 and $58, which dates back to 2015.

The significant decline in 2021 and 2022 was largely attributed to regulatory crackdowns in China. Authorities halted Ant Group’s IPO and imposed antitrust fines on Alibaba. Investors grew concerned about tighter government control over tech companies.

The company also faced slowing revenue growth and rising competition. U.S.-China tensions added more pressure on Chinese stocks. As a result, market sentiment turned negative, and Alibaba’s valuation fell sharply during this period.

After the drop in 2021 and 2022, Alibaba’s stock price consolidated between 2022 and 2025, forming a bullish base. The stock broke higher in February 2025, hitting $104, which confirmed the bottom formation. It continued to rally and reached $148.43 in March 2025.

In July 2025, Alibaba pulled back and retested the breakout level at $104. The stock is emerging with a bullish hammer at this level, suggesting strong buying support and a potential bottom. This bullish hammer will be confirmed if the Alibaba stock price is closed above $123 in July 2025.

This bullish pattern signals that Alibaba may now move toward the immediate resistance at $165. If Alibaba breaks above the $165 level, the next resistance zone lies between $220 and $225. A successful move through this range could set the stage for a long-term rally toward record highs.

Technical Breakout Confirms Alibaba Bottom

The bottoming process for Alibaba is also confirmed on the weekly chart. The stock has formed a V-shaped bottom, followed by a rounding pattern before breaking out above the $104 level. The retracement in July 2025 has generated a strong buy signal.

Notably, this buy signal coincides with the RSI rebounding from the 50 mid-level, which reinforces the bullish momentum. Additionally, the 50-day SMA is crossing above the 200-day SMA, a classic bullish crossover that supports the trend reversal.

These signals indicate that Alibaba is forming a solid bottom. The technical setup indicates a strong buying opportunity ahead of the next earnings announcement. Investors may consider initiating positions as the stock prepares for its next potential surge.

Financial Performance of Alibaba

Revenue and Profit Growth Across Core Segments

Alibaba delivered solid financial results for the quarter and fiscal year in 2025. The company reported a 6% year-over-year revenue increase, reaching RMB 996.3 billion (approximately US$138.29 billion). This growth was supported by strong performance in e-commerce and AI-driven cloud businesses. Moreover, the revenue for the March quarter also increased 7% year-over-year, reaching RMB236.5 billion (approximately US$32.5 billion).

Moreover, operating income also increased due to improved efficiency and lower non-cash share-based compensation expenses. For the quarter, income from operations increased by 93% to RMB 28.5 billion (approximately US$4.3 billion). For the full year, operating income increased 24% to RMB 140.9 billion (approximately US$20.41 billion), as shown in the chart below.

On the other hand, the net income has surged in both the quarter and the full year. In the March quarter, net income attributable to ordinary shareholders increased to RMB 11.97 billion (US$1.726 billion), driven by equity gains and effective cost control measures. However, the annual net income reached RMB 126 billion (approximately US$18.06 billion).

Shareholder Returns and Cash Flow Trends

Alibaba also enhanced shareholder returns through aggressive share repurchases and dividend payouts. The company repurchased 1.2 billion shares in fiscal 2025 for US$11.9 billion, reducing the outstanding share count by 5.1%. Additionally, it declared a US$4.6 billion two-part dividend, comprising a regular cash payout and a one-time special cash payout.

These actions reflect Alibaba’s robust financial position and commitment to returning capital to shareholders. The reduced share count boosts earnings per share, while the dividend signals management’s confidence in long-term cash flow. Together, these measures improve shareholder value and attract income-focused investors.

Despite strong earnings, free cash flow declined 53% to RMB 73.9 billion (US$10.76 billion) due to increased investment in cloud infrastructure. Operating cash flow also dropped 10% year-over-year. However, management remained confident in long-term growth, emphasising continued investment in core businesses, AI, and cloud initiatives to drive future gains.

The chart below illustrates Alibaba’s revenue distribution for the March 2025 quarter across its key business segments. The largest contributor is the Taobao and Tmall Group, accounting for 38.6% of total revenue. Other revenue follows with 20.5%, reflecting various smaller business lines.

The Alibaba International Digital Commerce Group contributes 12.8%, while the Cloud Intelligence Group adds 11.5%. Cainiao Smart Logistics makes up 8.2%, and the Local Services Group represents 6.1%. This breakdown highlights Alibaba’s continued strength in domestic e-commerce, while international and cloud segments show growing importance.

Alibaba’s Valuation Signals Upside Amid Improving Sentiment

The chart shows Alibaba’s forward price-to-earnings (P/E) ratio, which currently stands at 13.99 as of 24 July 2025. This valuation remains below its historical average, indicating that Alibaba stock is still trading at a discount despite recent gains.

The P/E ratio dipped below 10 in late 2024, reflecting investor caution during regulatory and macroeconomic pressures. However, the recent rise in the ratio suggests improving market sentiment as earnings stabilise and optimism around AI and cloud growth builds.

A forward P/E below 14 still positions Alibaba as undervalued relative to its growth potential and peers in the tech sector. As global trade conditions stabilise, Alibaba is well-positioned to benefit from improving sentiment and capital inflows into undervalued Chinese tech stocks.

Tariff Pressures and Global Trade Headwinds

Tariff headwinds have weighed on Alibaba’s stock in recent quarters. The announcement of 50% tariffs on Chinese goods earlier in 2025 triggered a sell-off, reflecting investor fears about pressure on cross-border operations and global demand.

However, as negotiations between the U.S. and China progress, sentiment has started to improve. Easing tensions and the potential rollback of tariffs could support a rebound in Alibaba’s international commerce growth, especially through its Tmall and AliExpress platforms.

To navigate these headwinds, Alibaba is focusing on its domestic strength and long-term growth themes. The company is accelerating investments in AI, cloud services, and instant delivery, all of which diversify revenue and reduce reliance on export-sensitive segments. At the same time, its low valuation, strong buyback program, and solid dividend yield offer downside protection.

Key Takeaways for Alibaba Stock

Alibaba has entered a new phase of recovery and strategic growth. The stock has rebounded from long-term support levels and shows strong technical signs of a bottom. Improved financial performance, the expansion of AI and cloud businesses, and positive investor sentiment support this momentum. The company’s bullish chart patterns and earnings signals suggest the potential for further upside.

At the same time, Alibaba continues to face external challenges. Tariff pressures and global trade uncertainties persist as ongoing risks. However, the company is managing these headwinds through diversification and reinvestment. Its discounted valuation, strong balance sheet, and active capital returns make it attractive for long-term investors. Since the stock has broken above $104, investors can consider buying at current levels with higher targets in view. The immediate resistance stands at $165. A breakout above $165 could trigger a strong rally toward $225.