Alibaba’s share price (NYSE: BABA, 9988.HK) has fallen roughly 7% over the past week even as a cluster of major Wall Street banks lifted price targets and reiterated Buy ratings, creating an unusual disconnect between analyst sentiment and market action that highlights the complex forces weighing on Chinese technology shares.
The NYSE listed Alibaba shares are 7% lower over the past week, despite making a technical bounce off the 50-day simple moving average, indicating some support in recent sessions. The stock has recovered modestly since the start of this week, trading roughly 2% higher, but remains below levels seen immediately following the company’s earnings report last week. The pullback came during a period when consensus price targets moved materially higher, with the average analyst target now sitting in the high-180s to low-190s range, implying upside of more than 40% from current levels in many cases.
Price Target, Price-Action Disconnect
In the past week, six analysts have raised their price targets on Alibaba following the company’s fiscal fourth-quarter 2026 results.
Nomura lifted its target from $200 to $207 while maintaining a Buy rating, marking one of the highest targets on the Street. Morgan Stanley increased its target from $180 to $190 with an Overweight rating, emphasising that Alicloud had delivered on all key metrics. The firm highlighted Model-as-a-Service annual recurring revenue at approximately RMB 8 billion, with expectations for RMB 10 billion in first-quarter fiscal 2027 and RMB 30 billion by year-end.
Mizuho raised its target from $190 to $195, pointing to strong artificial intelligence cloud revenue growth, whilst noting that AI-related revenue had reached approximately RMB 9 billion and projected that the Model-as-a-Service annual run rate could quadruple by year-end.
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Deutsche Bank lifted its target from $185 to $195, citing external cloud revenue growth of roughly 40% year-over-year and triple-digit AI-related revenue growth.
Barclays moved its target from $186 to $195, highlighting that AliCloud revenue growth had accelerated to 38% year-over-year, driven by stronger compute demand, while external customer revenue rose 40%.
Regional broker Yuanta Securities upgraded Alibaba to Buy from Hold, establishing a new Hong Kong target of HK$163.40.
Why Are Analysts Bullish on BABA?
The commentary centred on Alibaba’s cloud computing and artificial intelligence momentum. Multiple firms emphasised that the company’s AI infrastructure business is gaining commercial traction beyond usage metrics, with external customers driving a significant portion of the acceleration. The consensus view among these analysts is that Alibaba is positioning itself as a structural winner in China’s AI infrastructure buildout, with its Qwen large language model and cloud services capturing meaningful market share.
Alibaba today announced the launch of a new AI chip designed for both training and inference workloads, part of its broader strategy to develop domestic alternatives amid ongoing U.S. export controls on advanced semiconductors. The move reinforces the company’s vertical integration strategy, combining proprietary hardware with its cloud platform and AI software stack.
The disconnect between improving analyst sentiment and declining share price reflects a broader tension in how markets are weighing Alibaba’s long-term AI opportunity against near-term headwinds. While the cloud and AI metrics that emerged from the earnings report were undeniably strong. concerns persist about the company’s core e-commerce business and the broader Chinese consumer environment..
Macro and Geopolitics Driving Price
The past week’s decline occurred against a backdrop of rising global bond yields and renewed risk-off sentiment in technology shares.
U.S. Treasury yields pushed above 5% on hotter-than-expected inflation data and renewed Federal Reserve rate-hike pricing, forcing a de-rating of high-multiple growth equities across global markets. Chinese technology shares, which carry both growth-stock characteristics and additional geopolitical risk, were particularly vulnerable to this shift.
A recent China-U.S. summit concluded without major policy breakthroughs, weighing on sentiment toward China-linked equities. While improving diplomatic optics earlier in the year had helped reduce the geopolitical risk premium embedded in Chinese ADRs, the lack of concrete outcomes allowed structural concerns to reassert themselves. For U.S. investors, geopolitical and regulatory risks continue to impose a valuation ceiling on Alibaba regardless of operational progress.
What Now?
Alibaba now faces a critical test of whether its AI and cloud story can sustain interest through a period of macro uncertainty and muted near-term earnings visibility. The analyst community has clearly made its view known: with more than 90% of covering analysts maintaining Buy or Overweight ratings and price targets implying substantial upside, the Street believes the market is undervaluing Alibaba’s long-term positioning in AI infrastructure.
The bull case rests on the assumption that AI-related revenue can scale dramatically and that this high-margin business will eventually dominate the earnings mix, offsetting weakness in traditional e-commerce. External cloud customer growth of 40% year-over-year suggests Alibaba is winning enterprise workloads beyond its own ecosystem, a key indicator of competitive strength.
The bear case centres on execution risk in the near term and the persistent discount that markets apply to Chinese equities. Even if cloud and AI metrics continue to impress, questions remain about whether Alibaba can stabilise profitability in its core commerce operations while fending off aggressive competition. Macro factors including China’s economic trajectory, U.S-China relations, and global interest rates will likely continue to drive short-term volatility regardless.
