One-glance verdict
Undervalued
$306.24 our estimate vs market $104.41
Wall Street consensus: $186.60 (-39.1% lower than our fair-value estimate)
66% below our estimate, below the bear case
Fundamentals snapshot
Alibaba Group Holding Limited
BABA · NYQ · Consumer Cyclical · Internet Retail
Current price
$104.41
52-week range
$91.99 - $182.50
Market cap
$259.75B
Balance sheet
Healthy
6.09x Adequate
Net cash $17.85B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 8.1% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Stock trades 790.5% above its 5-year average P/E.
- Risk Operating margin compressed from 11.9% to 7.3% over 3 years.
What this company does
Alibaba Group Holding Limited
Alibaba is a huge Chinese company that helps businesses sell things online and in person, mostly through its popular shopping sites like Taobao and Tmall, and also offers cloud computing services. The money it makes comes mainly from these online sales platforms and advertising, which helps it maintain strong profit margins (the percent of each sales dollar left after paying for the direct costs of providing goods or services). This wide reach across e-commerce and other digital services makes it a significant player in the global tech and retail landscape.
How the company got here
Alibaba was founded in 1999 by Jack Ma and a group of friends in a small apartment in Hangzhou, China. They envisioned creating a platform that would help small and medium-sized Chinese businesses connect with buyers around the world. Alibaba's early success was driven by its B2B (business-to-business) marketplace, Alibaba.com, which facilitated wholesale trade. A major turning point was the launch of Taobao in 2003, a C2C (consumer-to-consumer) platform that quickly became China's dominant online marketplace, similar to eBay. This was followed by Tmall in 2008, a B2C (business-to-consumer) platform for brands and retailers to sell directly to consumers. These moves transformed Alibaba from a B2B portal into a comprehensive e-commerce giant.
What it actually does
At its core, Alibaba is a technology company that provides the infrastructure and marketing tools for businesses to sell products and services online. Think of it as the digital backbone for a vast ecosystem of online shopping, cloud computing, and logistics. It connects buyers and sellers, offers payment solutions, and provides the technology that powers these transactions. While many people know Alibaba for its online shopping sites, its operations extend much further, encompassing cloud services, digital media, and delivery networks.
Taobao and Tmall
This is Alibaba's core e-commerce business in China, making up a significant portion of its revenue. Taobao is a massive online marketplace where individuals and small businesses can sell directly to consumers, much like a giant digital flea market or a collection of small online shops. Tmall is a more curated platform where established brands and retailers sell their products to consumers, offering a more premium shopping experience. Consumers use these platforms to buy almost anything imaginable, from clothing and electronics to groceries and home goods, and they pay the prices set by the sellers.
Alibaba International Digital Commerce Group
This segment represents Alibaba's global e-commerce ambitions, aiming to replicate its domestic success internationally. It includes platforms like AliExpress, where consumers worldwide can buy directly from Chinese sellers, and Lazada, a leading e-commerce platform in Southeast Asia. Other key parts are Trendyol in Turkey and Daraz in South Asia. These platforms allow international consumers to shop for a wide variety of goods, often at competitive prices, and sellers to reach new markets beyond China.
Cloud Intelligence Group
This part of Alibaba is focused on providing cloud computing services, similar to Amazon Web Services (AWS) or Microsoft Azure. Businesses pay Alibaba Cloud to use its computing power, storage, and other IT resources over the internet, rather than buying and managing their own physical servers. This segment is crucial for powering Alibaba's own vast operations and is increasingly being used by external companies for their digital needs, from hosting websites to running complex data analytics.
Cainiao
Cainiao is Alibaba's logistics arm, responsible for managing and coordinating the delivery of packages across its various e-commerce platforms. It acts as a central hub that works with a network of delivery partners to ensure goods get from sellers to buyers efficiently. For shoppers, this means getting their online purchases delivered to their doorstep, and for sellers, it means having a reliable system to ship their products. This is a critical component that supports the entire e-commerce ecosystem.
What management is betting on now
Alibaba's management is currently focused on strengthening its core e-commerce businesses in China by improving user experience and offering more personalized services. They are also investing heavily in their cloud computing division, aiming to capture a larger share of the growing global cloud market. Additionally, the company is prioritizing international expansion, seeking to grow its presence in key overseas markets through its various digital commerce platforms. The goal is to diversify revenue streams and ensure long-term growth beyond its traditional Chinese e-commerce dominance.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$148.40B
Net income
$15.02B
Diluted EPS
0.80
Operating cash flow
$11.05B
Free cash flow
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Sources
Revenue
$137.30B
Net income
$17.93B
Diluted EPS
0.92
Operating cash flow
$22.53B
Free cash flow
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Sources
Is it cheap or expensive?
Fair value $306.24 vs current price $104.41
Wall Street consensus is the average analyst price target: $186.60 (-39.1% lower than our fair-value estimate).
Our most-likely fair value is $306.24 a share — about 193.3% above today's price of $104.41, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $17.9B - more cash than debt. Interest coverage 6.1x.
Net debt
$-17.85B
Interest coverage
6.09x
Alibaba Group Holding Limited's profit covers its interest bill about 6.1 times over.
Healthy
Worse cushion
Baseline
Better cushion
BABA
BASELINE
Alibaba Group Holding Limited
Total debt $39.93B Interest coverage 6.09x This is the baseline the peer rows are being compared against.
Total debt $251.64B Interest coverage 35.17x +477% vs BABA Carries about 5.8x more debt cushion than BABA.
Total debt $15.78B Interest coverage 1.32x -78% vs BABA Carries about 4.6x less debt cushion than BABA.
Total debt $70.68B Interest coverage 18.49x +203% vs BABA Carries about 3.0x more debt cushion than BABA.
Total debt $13.21B Interest coverage 20.01x +228% vs BABA Carries about 3.3x more debt cushion than BABA.
What you should know
The case for and against BABA
3 Rewards
2 Risks
Rewards
-
Revenue grew 8.1% last year.
-
Free cash flow was positive in 3/10 years.
-
Dividend yield is 1.0% with 4-year payout history.
Risks
-
Stock trades 790.5% above its 5-year average P/E.
-
Operating margin compressed from 11.9% to 7.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
25.28x
Forward P/E
11.24x
P/B
1.55x
P/S
0.25x
EV/EBITDA
1.90x
PEG ratio
0.50x
Profitability
How much profit each dollar creates
Gross margin
38.2%
Operating margin
7.3%
Net margin
7.0%
ROE
6.4%
ROA
1.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.24x
Current ratio
1.36x
Quick ratio
0.72x
Total debt
$39.93B
Total cash
$57.78B
Growth
How the business has been compounding
Revenue TTM
$542.54B
Revenue 5Y CAGR
2.5%
EPS TTM
4.13
EPS 5Y CAGR
17.0%
Cash flow
How much cash the business throws off
Operating CF TTM
$87.96B
Free CF TTM
$-7.60B
FCF margin
-1.4%
Dividend
Shareholder payout
Yield
1.0%
Payout ratio
25.4%
Last ex-div date
2026-06-11