Alibaba Group (NYSE: BABA) faces a pivotal moment. While its affiliate Ant Group’s Q4 net profit plunged 31% to RMB5.4 billion due to aggressive AI investments, Alibaba’s core e-commerce and cloud segments demonstrated remarkable resilience. This article argues that Alibaba’s undervalued shares, coupled with its structural advantages in tech and retail, make it a compelling despite near-term volatility.

Alibaba’s Taobao and Tmall units delivered to RMB136.1 billion, driven by a 9% surge in customer management revenue. Strategic initiatives like the tool for merchants and the (now boasting 49 million users) highlight a user-centric approach.

Even as direct sales declined 9%, Alibaba’s focus on high-margin services and premium memberships underscores operational discipline. The , up double digits year-on-year, represent a sticky, high-spending cohort insulated from macroeconomic pressures.

Alibaba Cloud’s marked another quarter of outperformance, with AI-related products surging over for the sixth straight quarter. The launch of (multi-modal) and (MoE-based) models in early 2025 solidified its leadership, with over built on Hugging Face.

Adjusted EBITA for the Cloud Intelligence Group soared to RMB3.1 billion, reflecting a shift to higher-margin public cloud services. With a in cloud and AI infrastructure—exceeding past decade spending—Alibaba is positioning itself as the .

Ant’s profit decline, while notable, is manageable. Alibaba’s 33% stake means the impact on net income is diluted, and Ant’s AI investments align with Alibaba’s strategic priorities. The two firms are now , with Ant’s technologies powering Alibaba’s e-commerce and financial services.

Moreover, the U.S.-China tariff suspension removes a key overhang, and Alibaba’s signals confidence.

While U.S.-China trade tensions persist, the tariff suspension buys Alibaba time to focus on growth. In retail, (a joint venture with Shinsegae) and in Turkey are expanding reach. In tech, Alibaba’s for enterprise AI solutions is outpacing competitors like Tencent in adoption.

At , Alibaba trades at , below its five-year average of 13x. Analysts project a , implying a , while its to RMB46.4 billion signals operational turnaround.

Conclusion: Buy Alibaba for the AI Decade

Alibaba’s is a rare entry point to own a with:
- A fortress balance sheet (RMB39 billion free cash flow, excluding cloud investments).
- AI-driven cloud growth outpacing peers.
- A resilient e-commerce engine with 49 million premium users.
- Undervalued relative to its long-term potential.

The near-term headwinds are temporary; the structural tailwinds—AI adoption, global e-commerce expansion, and Ant’s strategic synergy—are irreversible. Buy Alibaba now and hold for the AI decade.