In recent years, Alibaba Group (BABA) has faced significant challenges. Regulatory pressure, slowing domestic consumption growth, and fierce competition from rivals such as Pinduoduo and Meituan once weighed heavily on the stock of this former tech giant, leading many investors to abandon it. However, as we entered 2025, the situation began to change markedly. As of September 17, its stock price had surged nearly 87% over the past 12 months, outperforming both the Hang Seng Index and the Nasdaq Composite Index. In the face of such a strong rebound, many investors are wondering: should they take profits or continue holding in anticipation of further gains?
Behind this rebound lies substantial progress in Alibaba’s key business areas. In the first quarter of fiscal 2026, the company’s revenue reached RMB 248 billion, a 10% year-on-year increase, marking a return to double-digit growth and breaking the previous stagnation. Particularly noteworthy is the outstanding performance of its cloud business, where revenue soared by 26% to RMB 33.4 billion, with AI-related revenue maintaining triple-digit growth for eight consecutive quarters.
In response to competition from rivals like Pinduoduo and Meituan, Alibaba has been actively adjusting its strategy and expanding into high-growth areas such as fast-moving consumer goods (FMCG). Although short-term investments have been substantial, its e-commerce business still achieved a 10% year-on-year increase in the latest quarter, demonstrating that management is tackling market changes with an offensive mindset rather than merely cutting costs.
Despite the significant rebound in its stock price, selling too early could still mean missing out on future opportunities. Alibaba’s current price-to-sales ratio is only 2.8 times, far below the 7-9 times range seen in 2020. Its valuation still resembles that of a traditional retailer rather than a tech platform with multiple growth engines. As institutions such as Mizuho, Bernstein, and Citigroup have recently raised their target prices or reiterated bullish ratings, market sentiment remains in the early stages of recovery. If profit growth continues, it is likely to attract more institutional funds, driving further valuation repair.
Of course, Alibaba still faces many challenges. Its core e-commerce business continues to be squeezed by Pinduoduo’s low-price strategy and Meituan’s dominance in local services. Although revenue growth remains steady, non-GAAP net profit fell by 18% year-on-year last quarter, reflecting the pressure on profitability from investments in new businesses like FMCG.
Overall, Alibaba has emerged from its low point but is not yet completely out of the woods. If the company can continue to execute its current strategy in the coming quarters, particularly by making steady progress in cloud computing, artificial intelligence, and e-commerce innovation, this recovery may still have room to sustain.
