Investors in Alibaba are bracing for a potentially turbulent period as the Chinese e-commerce behemoth approaches a pivotal moment. Despite posting impressive gains earlier this year, the technology giant now confronts multiple challenges that have unsettled market participants. With geopolitical tensions escalating and profit projections being sharply revised downward, shareholders face a crucial question: is this a temporary setback or a potential buying opportunity?
Geopolitical Storm Clouds Gather
Adding to fundamental business concerns, a recent Financial Times report triggered significant investor anxiety. Allegations that Alibaba might be providing technological assistance to China’s military sent the stock price downward. Although the company issued categorical denials, the “White House Memo” has highlighted the persistent geopolitical risks facing international investors. This uncertainty continues to hamper any sustained recovery in the share price.
Earnings Report Looms With Grim Expectations
The company is scheduled to release its second-quarter financial results for fiscal year 2026 on November 25, and preliminary indicators appear concerning. Market experts anticipate a dramatic contraction in profitability, with earnings per share potentially plummeting by nearly 60% compared to the same period last year. Revenue is expected to show only marginal growth, while substantial investments and compressed profit margins weigh heavily on the balance sheet. With markets already positioned for disappointing news, any additional negative surprises could further pressure the stock.
Should investors sell immediately? Or is it worth buying Alibaba?
Artificial Intelligence Offers Glimmer of Hope
Amid the prevailing pessimism, Alibaba’s cloud computing division emerges as a potential bright spot. The segment has demonstrated triple-digit growth in artificial intelligence services, while its open-source model “Qwen” has positioned the company as a credible infrastructure competitor against American rivals. However, this expansion comes at a significant cost. Massive investments in AI infrastructure and intense price competition with companies like PDD Holdings are eroding profitability. These challenges are further compounded by China’s deflationary environment, which continues to suppress consumer spending and pressure the core commerce business.
Despite recent market corrections, Alibaba shares maintain a substantial gain of approximately 60% since the beginning of the year. This elevated valuation level leaves the stock particularly vulnerable should Monday’s quarterly report fail to meet already diminished expectations. The coming days will prove decisive in determining whether 2025’s success story begins to show signs of faltering.
Ad
Alibaba Stock: Buy or Sell?! New Alibaba Analysis from November 22 delivers the answer:
The latest Alibaba figures speak for themselves: Urgent action needed for Alibaba investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from November 22.
Alibaba: Buy or sell? Read more here...
