Alibaba Stock Bounce 36%: You Should Know This Before Jumping In

Alibaba Group (BABA) share price has risen 36% in the last quarter, attracting the attention of traders and investors looking for a game-changer in Chinese tech. The big question now: Is this rally just momentum, or is Alibaba finally back on solid ground?

What’s Driving Alibaba Stock Rally?

A few key events pushed the stock higher:

• Share Buyback Program: Alibaba bought back 51 million shares, or about 2.2% of its total shares, in a move aimed at rewarding shareholders and signaling confidence in its future. Buybacks often reduce the number of shares on the market, which can boost earnings per share and support price gains.
• Strong Earnings: The company posted solid third-quarter earnings, with net income rising sharply, a sign that its cost-cutting and restructuring efforts might be paying off.
• Market Sentiment Shift: Despite ongoing concerns about U.S.-China trade tensions, Alibaba’s performance stood out. The recent bounce in Chinese tech stocks helped too, but Alibaba’s gains were stronger than most.

Why Traders Are Watching Closely

Over the past year, Alibaba’s total return (including dividends) hit 64.76%, blowing past the 3.4% return of the U.S. Multiline Retail sector. That’s a clear sign of investor interest — but also raises the stakes.

While the company is seeing short-term strength, it’s worth noting that Alibaba’s average earnings dropped by 16.4% annually over the past five years. This latest surge could signal a turning point — or just a temporary bounce.

Alibaba Stock Still Looks Undervalued

Despite the rally, Alibaba is still trading well below the average analyst price target of $162.79 — which implies a potential 30% upside from current levels. That could attract more buyers, especially if upcoming quarters confirm sustained earnings growth.

Alibaba Future Growth - AI and Cloud

Looking forward, Alibaba is betting big on AI and cloud computing — two areas expected to drive long-term revenue growth. But it won’t come cheap. These investments could pressure margins and tighten free cash flow, especially in an increasingly competitive Chinese tech environment.

Bottom Line for Traders

• Momentum is strong after a 36% quarterly gain and solid earnings.
• Buybacks and improved net income have supported the stock’s climb.
• Valuation still suggests upside, but the rally is not risk-free.

If Alibaba continues to beat expectations, this could be the beginning of a longer-term recovery. But if earnings disappoint or political risks flare up, this rally could lose steam just as quickly as it started.

Verdict:Short-term bullish, but long-term sustainability needs proof.