Alibaba Shares Face Pressure Amid Broader Economic Concerns

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Despite posting impressive gains of over 50% for the year 2025, Alibaba's stock is now encountering significant headwinds. Fresh economic indicators from China have reignited fears of a sustained consumer slowdown, casting a shadow over the market. As the tech conglomerate pours substantial resources into artificial intelligence, investors are questioning whether expansion in its cloud division can offset persistent softness in its core commerce operations.

Operational highlights do offer some counterpoints to the prevailing negative sentiment. The company's most recent quarterly report revealed a 34% expansion in its cloud business, with products related to artificial intelligence being a particularly strong growth driver. Management is aggressively funding AI infrastructure and "Quick Commerce" initiatives to build long-term competitive advantages.

This strategic focus, however, comes at a significant cost. Adjusted EBITDA plummeted by 78% in the last reported quarter. Market analysts, nonetheless, largely view these expenditures favorably. Institutions including Citigroup and Susquehanna have recently raised their price targets for the stock, citing Alibaba's leading position in cloud computing and the potential of its proprietary large language models.

A Tale of Two Economies Hits Retail

The immediate catalyst for the stock's recent decline was a disappointing retail sales report from China's National Bureau of Statistics. November saw year-on-year growth of just 1.3%, marking the weakest performance since the end of strict COVID-19 measures in December 2022. This figure fell well short of the 2.8% increase analysts had anticipated.

The broad-based nature of the decline is especially concerning. Sales of household appliances and consumer electronics collapsed by nearly 20%, while automobile sales also retreated. Even previously resilient categories like cosmetics showed a loss of momentum. The data weighed not only on Alibaba but also dragged down competitors such as JD.com and Baidu.

This situation underscores what economists term a "two-speed economy" in China. While technology-driven sectors show vigor, traditional consumer spending is being hampered by the ongoing property market crisis. With approximately 70% of Chinese household wealth tied to real estate, the sector's price declines are severely dampening consumer confidence.

This dynamic poses a direct challenge for Alibaba, whose Taobao and Tmall commerce platforms remain the fundamental drivers of its revenue. The company's reliance on domestic consumption leaves it vulnerable to these macroeconomic shifts, despite management's efforts to diversify its business portfolio.

Technical Outlook and Valuation

Following a powerful rally earlier in the year, the equity has now entered a corrective phase. Currently trading at 125.40 euros, the shares sit roughly 22% below their 52-week peak. A Relative Strength Index (RSI) reading of 29.4 now suggests the stock is in oversold territory, which could potentially support a near-term technical rebound.

Investor attention is firmly fixed on the next set of quarterly results, scheduled for release on February 19, 2026. Until then, the share price trajectory is likely to remain closely linked to the critical question of whether fiscal measures announced by Beijing will take effect and genuinely revive private consumption in 2026.