Is BABA a good stock to buy? We came across a bullish thesis on Alibaba Group Holding Limited on Coughlin Cap’s Substack by Brian Coughlin. In this article, we will summarize the bulls’ thesis on BABA. Alibaba Group Holding Limited’s share was trading at $135.38 as of April 21st. BABA’s trailing and forward P/E were 24.68 and 20.58 respectively according to Yahoo Finance.
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Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People’s Republic of China and internationally BABA has seen heightened volatility ahead of earnings, driven largely by confusion around its brief inclusion on the Pentagon’s 1260H list.
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The designation, which only restricts U.S. military procurement and does not impact investors or trigger sanctions, was quickly removed and appears immaterial to Alibaba’s business, much like prior cases involving Tencent and CATL that saw no lasting effects. The incident, likely a bureaucratic misstep amid ongoing U.S.-China de-escalation, triggered a short-term selloff but does not alter the company’s fundamentals.
More importantly, Alibaba is at the center of an intensifying AI arms race in China. Over the Lunar New Year, major tech firms aggressively subsidized AI adoption, with Alibaba committing significant capital to drive engagement for its Qwen platform. The results were striking, with massive user growth and meaningful behavioral shifts, particularly among first-time and older users. This push reflects a broader strategy to transition from traditional app-based commerce to AI-driven agent ecosystems. On the model front, Alibaba’s Qwen 3.5 demonstrates competitive performance and efficiency, while its open-source models have achieved global scale, reinforcing its leadership in AI distribution.
Despite strong demand, particularly in cloud where growth remains robust, near-term margins are under pressure due to aggressive industry-wide investment and pricing competition, especially from ByteDance. Management has already guided conservatively, reflecting this investment cycle rather than any demand weakness. With subdued expectations, improving underlying trends, and multiple catalysts including AI monetization and potential partnerships, Alibaba appears positioned for a favorable risk/reward as it enters earnings.
