Is Alibaba Group Holding Limited (BABA) A Good Stock To Buy Now?

Is BABA a good stock to buy? We came across a bullish thesis on Alibaba Group Holding Limited on Coughlin Cap’s Substack by Brian Coughlin. In this article, we will summarize the bulls’ thesis on BABA. Alibaba Group Holding Limited's share was trading at $135.38 as of April 21st. BABA’s trailing and forward P/E were 24.68 and 20.58 respectively according to Yahoo Finance.

Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally BABA has seen heightened volatility ahead of earnings, driven largely by confusion around its brief inclusion on the Pentagon’s 1260H list.

The designation, which only restricts U.S. military procurement and does not impact investors or trigger sanctions, was quickly removed and appears immaterial to Alibaba’s business, much like prior cases involving Tencent and CATL that saw no lasting effects. The incident, likely a bureaucratic misstep amid ongoing U.S.-China de-escalation, triggered a short-term selloff but does not alter the company’s fundamentals.

More importantly, Alibaba is at the center of an intensifying AI arms race in China. Over the Lunar New Year, major tech firms aggressively subsidized AI adoption, with Alibaba committing significant capital to drive engagement for its Qwen platform. The results were striking, with massive user growth and meaningful behavioral shifts, particularly among first-time and older users. This push reflects a broader strategy to transition from traditional app-based commerce to AI-driven agent ecosystems. On the model front, Alibaba’s Qwen 3.5 demonstrates competitive performance and efficiency, while its open-source models have achieved global scale, reinforcing its leadership in AI distribution.

Despite strong demand, particularly in cloud where growth remains robust, near-term margins are under pressure due to aggressive industry-wide investment and pricing competition, especially from ByteDance. Management has already guided conservatively, reflecting this investment cycle rather than any demand weakness. With subdued expectations, improving underlying trends, and multiple catalysts including AI monetization and potential partnerships, Alibaba appears positioned for a favorable risk/reward as it enters earnings.

Previously, we covered a bullish thesis on Alibaba Group Holding Limited (BABA) by Kontra Investments in March 2025, which highlighted strong e-commerce recovery, cloud growth, AI expansion, and attractive valuation. BABA’s stock price has been flat since our coverage. Brian Coughlin shares a similar view but emphasizes on near-term volatility and accelerating AI-driven user adoption shaping future growth.Top of Form

Alibaba Group Holding Limited is on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 115 hedge fund portfolios held BABA at the end of the fourth quarter which was 130 in the previous quarter. While we acknowledge the risk and potential of BABA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BABA and that has 10,000% upside potential, check out our report about this cheapest AI stock.