Alibaba BABA is leaning on its cloud and overseas commerce engines to argue that better days lie ahead, but its fourth-quarter fiscal 2026 results, reported on May 13, leave that recovery far from assured. The trigger is clear: accelerating growth in two strategic units, the company is positioning itself as the foundation of its next chapter.
The Cloud Intelligence Group delivered the quarter's strongest showing, with revenues rising 38% year over year to RMB 41,626 million. Growth from external customers quickened to 40%, and AI-related product revenues reached RMB 8,971 million — an 11th straight quarter of triple-digit gains, now accounting for 30% of external cloud revenues. Cloud adjusted EBITA climbed 57% to RMB 3.8 billion, and management has continued expanding international data-center capacity across markets.
International commerce showed steadier, more modest progress. Alibaba International Digital Commerce Group revenues grew roughly 5.5%, with international retail up 5% to RMB 28,917 million and wholesale up 9% to RMB 6,512 million. The segment's adjusted EBITA loss narrowed sharply to RMB 138 million from RMB 3,574 million a year earlier, aided by improved AliExpress efficiency, while Alibaba.com broadened its AI tools with the launch of the Accio Work agent.
Yet the broader picture undercuts the recovery thesis. Group revenues rose just 3% to RMB 243.4 billion, adjusted EBITA collapsed 84% to RMB 5.1 billion, and non-GAAP net income fell 99.7% to RMB 86 million as heavy spending on AI infrastructure, quick commerce and user experience eroded profitability. Free cash flow turned negative for the year. The cloud and international momentum is genuine, but until that growth converts into durable earnings, Alibaba's path back to a sustained rerating remains uncertain.
How Amazon and Microsoft Stack Up in Cloud
Alibaba's cloud acceleration is unfolding against fast-moving competition. Amazon AMZN reported 28% revenue growth at AWS to $37.6 billion in its March-quarter results, its quickest pace in 15 quarters, as Amazon scaled custom Trainium silicon and AI infrastructure capacity. Microsoft MSFT, meanwhile, posted 40% growth in Azure and other cloud services, with Microsoft attributing the gain to rising AI workloads and continued data-center expansion. Both Amazon and Microsoft are directing heavy capital expenditure toward proprietary AI tooling and global infrastructure. The comparison underscores that Alibaba is contesting international cloud share against two scaled hyperscalers advancing aggressively across overlapping enterprise and AI markets.
BABA’s Share Price Performance, Valuation & Estimates
BABA shares have lost 11.6% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 6.1% and 4.3%, respectively.
BABA’s YTD Price Performance
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From a valuation standpoint, BABA stock is currently trading at a trailing 12-month Price/Earnings ratio of 40.97X compared with the industry’s 32.29X. BABA has a Value Score of D.
BABA’s Valuation
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The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $7.43 per share, down 4.6% over the past 30 days, indicating a 91% year-over-year increase.
Alibaba Group Holding Limited Price and Consensus
Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote
Alibaba currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).