BABA Soars to 3-year High, What's Next?

March 2, 2025

Credit: mfn

Shares of Alibaba (BABA) have skyrocketed 75% since our February 2024 buy alert as the company ramped up share repurchases and saw significant growth in revenue. Buybacks swelled to $16B last year, and an additional $20.7B has been authorized for share repurchases through March 2027.

While the company reported accelerated Q4 growth in its customer management (9%), cloud (13%) and global e-commerce business (32%), recently its AI initiatives have been grabbing all the attenton. In fact, sales of AI products saw triple digit growth for the sixth consecutive quarter.

- The cloud unit released new AI model, Qwen 2.5-Max, which supposedly "outperforms ... almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B."

- Chairman Joe Tsai announced a partnership with Apple to integrate its AI features on i-Phones in China.

- On a conference call with analysts, CEO Eddie Wu Yongming committed to investing $53B in the company's AI and cloud business infrastructure.

- Alibaba released its open-source video and image-generating AI model, Wan 2.1, providing a free, more accessible solution.

BABA shares closed at 3-year highs last month and broke through a multi-year resistance area, which represents a bullish technical indicator. Although a short-term correction is possible, we think BABA remains a good longterm investment as the company continues buying back shares and investing heavily in AI, making BABA the new AI stock to watch.