Key Takeaways
-
Alibaba stock rose 12% in the past week after Apple picked Qwen for its China AI launch.
-
Money also rotated out of US AI hardware into cheap Chinese internet stocks like Alibaba and Tencent.
-
Alibaba's AI unit lost RMB 13.9 billion in the June quarter, and free cash flow keeps running negative.
-
Near its usual multiple, the stock is a hold until Nov. 19's report shows those losses shrinking.
Alibaba ( BABA:NYSE )is up 12% in the past week, while the Nasdaq 100 fell 5%.
Apple ( AAPL:NASDAQ )started it on Saturday, Oct. 31, saying Apple Intelligence will launch in China in December on Alibaba's Qwen model. Then money moved out of US AI hardware and into cheap Chinese internet stocks like Alibaba and Tencent ( TCEHY ).
Apple gave Qwen its biggest stage yet
Apple's developer test of the Qwen features began in China on Wednesday. That's cheap reach : marketing the Qwen app helped push Alibaba's AI Labs and Applications unit to a RMB 13.9 billion adjusted EBITA loss in the June quarter.
Apple needs this too. Its Greater China sales grew 21% to $17.54 billion in the September quarter, below Wall Street's estimates, and the December launch helps it catch Huawei on features in its holiday quarter.
TIKR tracks 41 analysts on Alibaba. How many say "Buy"?
See the full breakdown of Buy, Hold, and Sell ratings on Alibaba, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Alibaba's Analyst Ratings
Beijing and a rotation did the rest
China's central bank widened a swap facility for brokers and funds on Monday. On Thursday, Hong Kong's Hang Seng Tech index jumped 6%, its biggest gain since February 2025. Money left AI hardware for discounted Chinese internet platforms, led by Alibaba and Tencent.
Tencent just rolled out Hy4, its new flagship AI model, and it shares Alibaba's problem. The two, with ByteDance, ordered about 6 million Nvidia RTX Pro 5500 chips but expect only about 1% of them over the next four months, Bloomberg reported.
Nov. 19 has to show the AI money working
Alibaba reports its September quarter on Nov. 19. Analysts expect normalized earnings per share to more than double from fiscal 2026 to fiscal 2028 (years to March):
The Apple deal brings users before profit, so it shouldn't move those estimates much. Hitting them takes a smaller AI Labs loss, and free cash flow ran negative in five of the past six quarters, with a RMB 44.7 billion June-quarter outflow.
Before the run, Alibaba traded at 12x forward earnings, under its five-year average of 13x:
At Friday's close, it's a touch above that average.
I'd hold, and wait for a shrinking AI Labs loss on Nov. 19 before buying more, since cash is still going out the door. Of course, Apple left the new Siri out of its first China wave, so Qwen's real reach on iPhones won't be clear for a while.
So what is Alibaba stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR's valuation model and see what Alibaba could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It's free to use.
