Alibaba Group Holding (NYSE:BABA) drew fresh investor attention after a pre-earnings briefing highlighted narrowing losses in its instant-commerce business and steady profitability, alongside renewed interest in Chinese internet stocks tied to AI infrastructure themes.

The recent rally around Alibaba Group Holding has come after a weak run, with the stock down 18.93% on a 30 day share price basis and the year to date share price return falling 36.98%. The 3 year total shareholder return of 13.52% contrasts with a 5 year total shareholder return that is down 50.27%. This suggests longer term holders have seen value erode even as short term momentum tentatively rebuilds around AI infrastructure and regulatory headlines.

If AI infrastructure themes around Alibaba have caught your eye, it can be helpful to compare them with other potential beneficiaries. Take a look at the 52 AI infrastructure stocks

After such a sharp bounce but with Alibaba Group Holding still carrying heavy longer term losses, does the current price genuinely skew the risk reward in favour of new buyers, or has the easy upside already been taken?

Most Popular Narrative: 33.5% Undervalued

Based on the most followed narrative, Alibaba Group Holding is valued at $147.49 per share compared with the last close at $98.14, which frames the stock as materially discounted in that narrative.

Alibaba is currently in an aggressive transition phase, prioritizing long-term growth over short-term profits. The company is heavily investing in two key areas: AI (with its "Qwen" assistant) and instant commerce (Taobao Flash Sales).

The fair value in this narrative leans heavily on how quickly AI tools and instant commerce can scale inside Alibaba Group Holding. Revenue, margins and the earnings base all play a role. Curious which assumptions need to hold for that valuation gap to make sense.

Result: Fair Value of $147.49 (UNDERVALUED)

However, Alibaba still faces clear risks, including ongoing regulatory scrutiny in China and the possibility that heavy AI and instant commerce spending fails to translate into durable profitability.

Next Steps

If the mixed sentiment around Alibaba Group Holding has you undecided, now is a good time to review the underlying facts and form your own stance. To see what investors view as the upside case, take a closer look at the 4 key rewards

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.