Since the launch of its Qwen 2.5 flagship model on January 29, Alibaba has seen its stock price surge by 23%. Following the dramatic drop of Nvidia two days prior, Alibaba's share price has skyrocketed by 37%, significantly outperforming the marketAs companies increasingly pivot towards artificial intelligence and cloud computing, analysts and investors alike are keenly monitoring Alibaba's developments in these sectors.

On February 13, analysts from JPMorgan Chase—Yao Cheng, Zhang Zhihong, and Chen Qi—released an in-depth report elucidating their bullish stance on Alibaba Group's stockThey firmly believe that there is ample room for further appreciation of Alibaba's stock price, attributing this confidence to three primary factors.

Firstly, they note an upward adjustment in the valuation multiples of Alibaba Cloud, predicting an increase in forecasted revenue from cloud operationsSecondly, they observed an optimistic shift in the profit expectations tied to Alibaba's e-commerce businessThese projections have led JPMorgan to maintain an "overweight" rating for Alibaba, setting a target price of HKD 120 for the Hong Kong stock and USD 125 for the US stock market, with Alibaba's US stock trading at USD 118.33 at the time of the reportTheir analysts have underscored that Alibaba remains their top pick in the Chinese internet sector.

In the most recent trading session, Alibaba's stock experienced a notable increase, rising 4.34% to close at USD 124.73, showing only a minor gap of 0.22% from JPMorgan’s target price.

As indicated in the report, the reassessment of Alibaba Cloud's valuation presents significant upside potentialThe analysts argue that current market valuations for Alibaba Cloud are considerably understatedBased on JPMorgan's revenue forecasts for Alibaba Cloud, analysts forecast that the expected enterprise value-to-revenue ratio for 2025 could hover around 4x, which aligns with estimates for Kuaishou Cloud, a perceived smaller participant in the Chinese cloud market.

However, being the leader in the Chinese cloud space, Alibaba Cloud's valuation should, in theory, compare favorably to that of U.S.-listed Software as a Service (SaaS) cloud providers

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Assuming a conservative average valuation of 6.5 times for U.SSaaS companies, Alibaba Cloud's potential value could hit as high as USD 115 billionThis valuation shift could elevate Alibaba’s overall worth to approximately USD 320 billion, spotlighting a corresponding 14% upside in the stock price.

Significantly, if we apply a more aggressive valuation approach—mirroring Microsoft’s multiple of 10.5x—Alibaba Cloud could even be valued at USD 185 billionSuch an adjustment would propel Alibaba's market valuation to USD 391 billion, suggesting an astonishing 39% rise in stock price driven by the cloud business aloneAnalysts concede that while these predictions may seem overly optimistic, they nonetheless highlight the substantial valuation flexibility surrounding Alibaba Cloud.

Apart from the multiple adjustments, the report cites two additional catalysts for the upward trend in Alibaba's stock: optimistic revenue projections for its cloud services and elevated profit expectations within its e-commerce sector.

In terms of Alibaba Cloud, JPMorgan has conservatively projected a 10% revenue growth rate for the fiscal year 2026, but there could be another 10% added to that projectionThe analysts have established that for every 2% increase in revenue growth rate, Alibaba’s stock could rise by 1% as a direct correlation.

Meanwhile, Amazon is not the only player in the gameAs competition intensifies in the domestic e-commerce space, Alibaba continues to be a pivotal industry participantRecent optimistic sentiments regarding Alibaba's e-commerce division indicate it is well-poised for future growthAnalysts have postulated that for the fiscal year 2026, Alibaba's adjusted earnings per share will surpass market consensus by 12%, a forecast backed by solid operational performance and market dynamics.

Over the past few years, China’s e-commerce landscape has undergone significant transformations propelled by technology and changing consumer demands

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Alibaba has actively adapted to these shifts, fine-tuning its business strategiesFrom enhancing platform infrastructure to improving user experiences, the company has made significant strides in solidifying its foundation in the domestic e-commerce sectorThe ongoing economic recovery and an encouraging consumer climate have positively impacted sector fundamentals, leading to increased confidence among consumers.

Moreover, JPMorgan, renowned for its astute observations in the financial sector, has expressed confidence in Alibaba’s trajectoryAnalysts note that Alibaba's dominance is not merely a function of its staggering user base and market share but is rooted in its innovative business models and robust profitability capacityBy successfully integrating online and offline resources, Alibaba has diversified its revenue channels, paving the way for lucrative new opportunities.

Within its core e-commerce divisions—Taobao and Tmall— Alibaba continues to witness stable growthTaobao appeals to a wide range of consumers, especially younger shoppers and small businesses, with its varied product lineup and competitive pricingMeanwhile, Tmall has carved out a reputation for high-quality goods and excellent customer service, making it the go-to platform for many established brandsFurthermore, Alibaba's logistics platform, Cainiao, continually enhances delivery efficiency, resulting in faster order fulfillment and improved customer satisfaction, all contributing to driving e-commerce growth.

Despite fierce competition in the domestic e-commerce sphere, Alibaba’s robust brand presence, depth of experience, and superior technological capabilities solidify its leading position in the marketAs the e-commerce sector continues to normalize and develop, there remain promising opportunities for Alibaba to capture additional market share and bolster its profitabilityIts international expansion initiatives also represent a significant growth frontier, allowing the company to establish partnerships across the globe, promoting Chinese goods internationally.

Looking ahead to the third quarter of the 2025 fiscal year, analysts suggest a positive trajectory for GMV growth in both Taobao and Tmall, coupled with increased customer management revenue

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