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

Written by

Fabien Yip

Market Analyst, IG

When is Alibaba reporting earnings?

Alibaba Group will release its March quarter 2025 and full fiscal year 2025 results at 7.30pm (Hong Kong time) on Thursday 15 May 2025. The Chinese e-commerce giant is expected to provide insights into its financial performance, strategic initiatives, and future outlook.

Earnings expectations

The company has been diversifying its business beyond its core e-commerce platforms to include cloud computing, fintech, and entertainment sectors. This earnings report will give investors valuable information about how these initiatives are progressing amid challenging economic conditions.

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. Market watchers will be closely monitoring these results as a barometer for Chinese economic health.

Analysts anticipate Alibaba to report fourth-quarter revenue growth of 6.4% year-on-year (YoY) to RMB 236.1 billion. This would bring the fiscal year 2025 revenue to RMB 1000.5 billion, a significant milestone for the company.

Net income attributable to ordinary shareholders is expected to show impressive improvement, with projections indicating a 68.7% increase to RMB 134.5 billion. Gross margin is forecast to expand from the previous year's 33.3% to 37.2%, demonstrating the company's ability to improve its cost structure and operational efficiency.

Figure 1: Financial results expectations

What to watch for in Alibaba's report

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.

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.

The company's expansion into artificial intelligence represents another critical area for investors to monitor, as Alibaba has committed to investing more than RMB 380 billion in AI and cloud computing infrastructure over the next three years to compete with global tech giants in this rapidly evolving space. They have also rolled out a new AI model family called Qwen3 which can compete with models from major competitors like OpenAI's 'o-series' and Google's Gemini Pro. The cloud intelligence group is expected to grow by approximately 16% year-on-year, increasing its share of overall revenue and represents a key driver of future growth.

The 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 ecommerce sector as a whole.

Figure 2: Alibaba's revenue breakdown by business segment

Macro factors to be considered

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.

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.

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.

Figure 3: Wall street analyst estimates

Figure 4: 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.

Figure 5: Peer comparison

Alibaba share price 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.

Figure 6: Alibaba daily price chart