Alibaba Shares Gain Analyst Favor Amid Strategic AI Validation

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A surprising endorsement from Silicon Valley has cast a spotlight on Alibaba's technological capabilities. Meta Platforms is reportedly utilizing the Chinese conglomerate's proprietary Qwen artificial intelligence models to develop its own internal systems. This move, seen as a significant validation of Alibaba's AI prowess, has prompted positive reactions from market analysts, including a substantial price target increase from Citigroup. Despite this, the company's share price has shown limited movement.

The catalyst for renewed analyst interest stems from Meta's integration of Alibaba's open-source Qwen model into an internal initiative known as "Avocado." The Facebook parent company is leveraging the Chinese technology for training its own systems—an uncommon step that highlights the perceived quality of Alibaba's AI offerings. For Alibaba, this collaboration represents more than a prestige victory; it serves as concrete evidence of the international competitiveness of its AI development and could attract additional licensing partners.

Citigroup Identifies Significant Upside

In response to these developments, Citigroup has raised its price target for Alibaba to $225 per share. The investment bank argues that the market is underestimating the accelerated adoption of AI and the recovering cloud computing business. Supporting this view, Alibaba's Cloud Intelligence Group reported a 34.5% revenue increase in the most recent quarter, fueled by triple-digit growth rates within its AI-related segments.

Another research firm, Sanford C. Bernstein, maintains a long-term positive outlook, reaffirming its assessment despite adjusting its target down to $190. Both analyst notes reference Alibaba's substantial investment offensive, with approximately $53 billion earmarked for AI infrastructure over the next three years.

Profit Contraction Masks Transitional Phase

The substantial investments are reflected in the company's recent financials. Alibaba's net profit experienced a sharp 72% decline in its second fiscal quarter. Beyond valuation effects, the primary pressures on margins are the high expenditures for data centers and AI chips.

Concurrently, Alibaba's investment portfolio may soon provide positive momentum. Reports indicate that MiniMax, an AI startup co-funded by Alibaba, is considering an initial public offering as soon as January 2026. A successful listing at a higher valuation would directly benefit Alibaba's holdings.

Technical Perspective

Alibaba's stock is currently trading around $156, testing a support zone between $153 and $155. A sustained breakout above the $160 level could technically pave the way for a move toward the October high of $161.60. The current price stagnation contrasts with the optimistic fundamental picture painted by recent strategic partnerships and analyst upgrades.