Alibaba Q4 2025 earnings preview: AI investment and trade tension in focus

When is Alibaba reporting?

Alibaba Group will release its March quarter 2025 and full fiscal year 2025 results at 7.35pm (AEST) on Thursday 15 May 2025. The company is expected to provide insights into its financial performance, strategic initiatives, and future outlook.

Earnings expectations

With China's domestic economy showing signs of deflation, Alibaba's performance serves as a key indicator of consumer spending patterns within the world's second-largest economy.

Analysts anticipate Alibaba to report:

• Fourth-quarter revenue growth of 6.4% year-on-year (YoY) to RMB 236.1 billion
• Fiscal year 2025 revenue reaching RMB 1000.5 billion, a significant milestone
• Net income attributable to ordinary shareholders increasing 68.7% to RMB 134.5 billion
• Gross margin expanding from the previous year's 33.3% to 37.2%

Alibaba financial expectations

What to watch for in Alibaba's report

• Core e-commerce business

Taobao and Tmall Group, Alibaba's core domestic e-commerce business, accounted for 49% of total revenue in the previous quarter. Investors expect this segment to grow by approximately 5% year-on-year as the Chinese government implements stimulus measures to combat economic deflation.

• International commerce performance

The international digital commerce business, which contributed 15% of revenue in Q3, represents another crucial segment to monitor. This division has been the company's fastest-growing business but faces significant challenges from recent changes in US trade policies.

• AI and cloud investments

The company's expansion into artificial intelligence represents a critical area for investors to monitor. Alibaba has committed to investing more than RMB 380 billion in AI and cloud computing infrastructure over the next three years.

The company has rolled out a new AI model family called Qwen3 to compete with offerings from major competitors like OpenAI and Google. The cloud intelligence group is expected to grow by approximately 16% year-on-year, increasing its share of overall revenue.

• Forward guidance

Management's guidance for Q1 2026 will be another focal point, especially regarding revenue projections and margin expectations. Any adjustments to outlook could significantly impact market sentiment toward the e-commerce sector as a whole.

Alibaba's revenue breakdown by business segment

Macro factors to be considered

• Chinese economic conditions

China's domestic economic conditions continue to play a crucial role in Alibaba's performance. Recent deflationary pressures have prompted government stimulus measures, the effectiveness of which will directly impact consumer spending on Alibaba's platforms.

• US trade policy impacts

The uncertainty in trade policies represents a key headwind for Alibaba's international e-commerce business. The US has recently removed tariff exemptions on imported goods below US$800 in value, subjecting these packages to 120% duties or a flat rate of $100.

• AI competition landscape

Fierce competition in AI technology is another important factor to monitor. While Alibaba's strategic partnership with  Apple may help increase the market share of their AI model, ongoing US-China tensions create significant risks for the company's global expansion plans.

Analyst outlook and target price considerations

Analyst sentiment on Alibaba has remained relatively stable over the past two years. According to LSEG Data & Analytics, 16 out of 43 analysts currently assign a 'strong buy' recommendation to Alibaba's US-listed ADR (BABA), with 25 'buy' ratings and just two 'hold' recommendations.

TipRanks shows a similar bullish picture, with all analysts rating Alibaba as a 'buy'. Their Smart Score metrics further reinforce the positive outlook for the e-commerce giant heading into this earnings report.

The average one-year price target from analysts stands at $160.54, suggesting a potential 30% increase from the 7 May 2025 closing price of $123.23. This optimistic target reflects confidence in Alibaba's strategic initiatives and growth prospects.

Wall Street analyst estimates

TipRanks smart score charts

Following the steep year-to-date rally of 45%, the company's price-to-earnings (P/E) ratio has risen to close to 19 times. While this is higher than the broader Chinese stock market and peers like PDD and JD.com, it remains reasonable compared to Amazon, its US-equivalent peer.

Peer comparison chart

Alibaba technical analysis

Alibaba's shares have generated impressive returns of 45% so far this year, though they still trade at a 61% discount from their all-time high.

The technical chart shows characteristics of an overall uptrend as the shares are trading well above the technically critical 200-day simple moving average (SMA). This positive momentum indicates strength in the stock's current trajectory heading into the earnings report.

A better-than-expected earnings report could drive the share price toward the recent peak at $148, potentially signalling the continuation of the current uptrend.

However, technical indicators suggest some caution may be warranted. There may be some pullback towards the $128-129 level if the current up leg resembles a corrective Wave B under Elliott Wave Theory. Disappointing financial results could see the stock testing support near the recent low of $95, with potential for further decline towards $77 if this support is breached.

Alibaba daily chart