Alibaba stock (NYSE: BABA) jumped 11.2% as of 12:22 p.m. ET on Wednesday, marking its best day in nearly a year. The surge was primarily triggered by UBS analyst Kenneth Fong's optimistic note suggesting the company likely produced margin-widening revenue growth during the quarter ending in June, led by 45% top-line growth from its cloud computing unit. As reported by Investing.com, the rally was driven by Alibaba's instant-commerce business losses narrowing last quarter while overall profit remained steady. The positive momentum extended across US-listed Chinese tech stocks, with JD.com (NASDAQ: JD) and Baidu (NASDAQ: BIDU) also benefiting from the rotation as traders sold Korean and Taiwanese chipmakers. Today's gains also allow investors to view recent headlines through a more bullish lens, including Monday's decision from a U.S. federal judge to block the Pentagon from designating Alibaba as a Chinese military company under Section 1260H rules.
Despite the strong stock performance, several major banks quietly reduced their price targets for Alibaba. As reported by Investing.com, Morgan Stanley cut its price target to $180 from $190, Citi to $192 from $208, Daiwa to $175 from $200, and HSBC to $170 from $176. All banks maintained their 'Buy' ratings despite the target cuts. The analysts cited heavy AI spending that impacts near-term earnings and cautious Chinese shoppers keeping core advertising and commerce revenue soft as reasons for lower fair value estimates. However, Jefferies analysts also added this morning that "macro headwinds and softness in consumer sentiment are in the price," suggesting growing optimism about the company's prospects. Recent developments show Benchmark reiterated a Buy rating with a higher price target of $220.00, highlighting Alibaba's cloud growth and profitability as key drivers, while Bernstein SocGen Group expressed confidence in Alibaba's AI revenue growth, noting the company reported RMB9.0 billion in AI revenue for the fourth quarter, making up 30% of Alicloud's external revenue. The Street's average price target sat near $190, roughly 75% above Tuesday's close - a gap that reflects how deeply the stock has been discounted relative to analyst valuations.
The stock's recovery began from around the $92 zone, near its 52-week low, and has trended lower since early May. According to Investing.com analysis, to keep the recovery alive, BABA needs to reclaim $109.86 and hold the $110 zone. The key resistance sits near $112.89, only about 4% higher, with a clean break there opening the path to $122.33 and then $147.09. If $112.89 rejects the price, support sits at $96.82, with room lower if that breaks. The latest gains suggest the stock may be breaking out of its recent bearish trend after being down by nearly half since its October peak. Currently trading at $108.98, the stock remains undervalued with shares trading 43% below their 52-week high of $192.67, according to InvestingPro analysis. A big day like today is a tough act to follow, so don't be surprised if BABA shares show some weakness as soon as Thursday. The buying momentum appears genuine rather than speculative, supported by positive technical indicators, with the Chaikin Money Flow (CMF) climbing since June 16 and volume spiking near 39 million shares.
Alibaba announced a comprehensive upgrade to its AI stack, unveiling the Qwen3.7-Max model aimed at enhancing agentic coding and complex reasoning capabilities. This upgrade is part of Alibaba's efforts to bolster its cloud infrastructure and AI services for global developers and enterprises. Additionally, the company has disclosed over RMB8 billion in group-wide MaaS revenue, with a significant portion attributed to Alicloud. These developments come amid broader regulatory concerns affecting Chinese companies, as China's securities regulator plans to penalize several cross-border brokerages for operating without proper licenses. HSBC noted that Alibaba's share price has rebounded 17% from its low point this month, with the stock posting a 13.36% gain over the past week, though it remains down 27% over six months. The firm identified potential catalysts including continued improvement in cloud growth, sustainable margin expansion through in-house chip adoption and price increases, and advancement in AI models.
