Alibaba: Risk Outweighs Reward In Its Q3 Earnings Despite AI Chips

2026-02-18 07:55:06 ET

Investment Thesis

The fact is Alibaba Group Holding Limited ( BABA ) ( BABAF ) has generated only +65% in stock price appreciation since its IPO twelve years ago, and I believe the company will likely continue to underperform in light of its modest growth and compressed margins, despite huge AI tailwinds. The +30% rally in the last twelve months only worsened the buy case with a starker valuation in light of earnings that didn’t follow. The fact that it is trading today at a 20% discount from its 52-week high of almost $200 per share is, in my opinion, not an opportunity but a reflection of the disappointment....

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