Alibaba Nears Support with Earnings Ahead
By Martin Lam
Overview
Alibaba (NYSE:BABA) is approaching a critical support level of $148.71 as it prepares to release its earnings report. The upcoming earnings could significantly influence the stock's trajectory, with a potential decline towards $116 if the support fails to hold.
Earnings Report Details
Alibaba is set to report its quarterly earnings on February 18, focusing on key areas such as cloud revenue, AI profits, and e-commerce performance. The company is expected to show an increase in revenue, projected at RMB 290.98 billion, which represents a nearly 4% rise from RMB 280.15 billion. However, earnings per share are anticipated to drop by approximately 44% compared to the previous year.
Market Context
Despite a 30% increase in Alibaba's shares over the past six months, the stock has seen a 10% decline in the last month, reflecting a cooling interest from tech investors. Analysts are particularly interested in whether Alibaba's revenue is shifting towards higher-growth segments, even as profit margins are pressured by capital expenditures.
Performance Highlights
In its 2026 earnings call, Alibaba reported a 34% increase in cloud revenue and strong customer adoption rates. AI products have also shown impressive growth, maintaining triple-digit increases, while quick commerce revenue has surged. However, significant investments in cloud infrastructure and quick commerce have negatively impacted profit margins and free cash flow, which will be a focal point in the upcoming earnings report.
Competitive Landscape
Analysts will be looking for evidence of Alibaba's competitive strength against rivals like JD.com and PDD Holdings in both domestic and international markets. Current data indicates that analysts have an average upside target of 19% for BABA shares, suggesting a cautious optimism about the stock's future performance.