Alibaba Rides the AI Cloud Wave: Can the Stock Break $200 After Citi’s Price Target Hike?
Introduction: Citi’s Bullish Call Sparks Market Buzz
On September 24, 2025, Citi raised its price target for Alibaba Group (BABA) American Depositary Receipts (ADRs) from $187 to $217 and its Hong Kong shares from HK$183 to HK$215, maintaining a “Buy” rating. The upgrade was fueled by strong traffic at the Yunqi Conference and Alibaba’s optimistic forecast of a tenfold increase in data center capacity. Citi also boosted its projections for the company’s cloud revenue and capital expenditures, highlighting AI as a key growth driver. Meanwhile, Cathie Wood’s ARK Invest has piled into Alibaba, with holdings exceeding $16 billion, further stoking investor interest.
As of 3:05 PM NZST on September 25, 2025, Alibaba’s ADR price has surged to $177.93, up nearly 9% from the previous close of $163.08, hitting a near-four-year high. The stock has risen over 110% year-to-date, outpacing the Nasdaq. The big question: Is Citi’s optimism justified? Should investors hold, follow Wood’s lead, or expect a push past $200? This analysis dives into the latest fundamental and technical data to provide a clear perspective.
Fundamental Analysis: AI Cloud Fuels Growth, E-commerce Faces Challenges
Alibaba’s fundamentals in 2025 show a tale of two stories: a recovering e-commerce core and a thriving AI-driven cloud business. With a market cap of $429.8 billion and a trailing P/E ratio of 20.50—well below Amazon’s 40+—the stock appears undervalued.
Cloud Business: Triple-Digit AI Growth
Alibaba Cloud is the company’s fastest-growing segment. In the first quarter of fiscal 2026 (ended June 30, 2025), cloud intelligence revenue hit 33.398 billion RMB, up 26% year-over-year, outpacing the company’s overall 2% growth (10% excluding divested units). AI-related revenue has delivered triple-digit gains for eight straight quarters, now accounting for over 20% of external client revenue. This surge stems from heavy AI infrastructure investments, with CEO Eddie Wu announcing plans to exceed the prior $53 billion (380 billion RMB) three-year commitment. Globally, Alibaba aims to tap into a projected $4 trillion AI market over the next five years.
Key moves include launching the Qwen3-Max language model and custom AI chips to reduce NVIDIA reliance, expanding data centers to Brazil, France, and the Netherlands, and partnering with China Unicom on AI accelerators. While margins are squeezed by upfront costs, management expects double-digit revenue growth, rivaling Google Cloud (32%) and Microsoft Azure (26%), with a leading 33% share in China.
E-commerce: Recovery Amid Competitive Pressure
E-commerce (Taobao and Tmall), which accounts for over 50% of revenue, grew 10% in Q1, driven by “Taobao Instant Commerce” and expanded pre-warehousing. However, EBITA fell 21% due to intensified subsidy wars with PDD and Meituan in instant retail. International e-commerce, including AliExpress, rose 12% as it targets Amazon sellers, but total revenue of 247.65 billion RMB missed analyst expectations.
Financial Health and Shareholder Returns
With earnings per share at $8.68, operating cash flow up 18%, and net cash reserves of $50.5 billion, Alibaba remains financially robust. The company repurchased $11.9 billion in shares, reducing float by 5.1%, though its 0.64% dividend yield is modest. Management forecasts double-digit revenue growth in the second half, despite risks from regulatory uncertainty and economic slowdown.
In short, the fundamentals are solid, with cloud AI as the standout, supporting Citi’s $217 target—though e-commerce challenges warrant caution.
Technical Analysis: Bullish Momentum, but Watch for Overbought Signs
Alibaba’s stock chart reflects a strong bullish trend in September, breaking key resistance at $147.70 and testing $170, with the current price at $177.93 (52-week range: $80.06-$180.16, average volume: 17.1 million shares).
Moving Averages and Trend
• 5-day SMA: $176.87 (mild sell signal, but index MA bullish).
• 50-day SMA: $165.75 (buy).
• 200-day SMA: $140.63 (strong buy). With 11 buy and 1 sell signal, the stock is in a clear uptrend, supported by a 40% rebound from April lows and a bullish triangle breakout with rising volume.
Oscillators
• RSI (14-day): 68.39 (buy, nearing 70 overbought level).
• MACD (12,26): 3.47 (buy, momentum growing).
• Stochastic (9,6): 83.72 (sell, overbought).
Support/Resistance and Outlook
Fibonacci pivot points show support at $176.32 (S1) and $176.17 (S2), with resistance at $176.80 (R1) and $176.95 (R2). Key support lies at $155.44 (volume accumulation zone), with potential to reach $190-$200 if held. The overall technical rating is a strong buy (9 buy, 0 sell), with a beta of 0.10 indicating low volatility.
The technicals align with Citi’s view, suggesting a $200 target is feasible, though a short-term pullback due to overbought conditions is possible.
Conclusion: Hold with Confidence, $200 Within Reach
Alibaba’s fundamentals and technicals paint a compelling picture. The 26% cloud growth and global AI expansion validate Citi’s $217 target, while Cathie Wood’s stake adds credibility. For investors, holding is a solid strategy, with cloud-driven valuation upside potentially pushing the stock past $200. Short-term traders might wait for an RSI dip below 60 to enter.
Risks remain: U.S.-China trade tensions, e-commerce competition, and economic uncertainty could trigger volatility. Analyst consensus sets an average target of $167.25, with a high of $195, leaving room to $220 with further catalysts. The next earnings on November 14 will be critical. Overall, a buy-and-hold approach targeting $200 is recommended.
References:
• [0] Yunqi Conference traffic and data center expansion, Citi analysis, Sep 24, 2025.
• [1] Eddie Wu’s AI investment announcement, Alibaba Q1 2026 earnings call.
• [2] Year-to-date performance vs. Nasdaq, Yahoo Finance, Sep 25, 2025.
• [3] Trade tension risks, Bloomberg, Sep 23, 2025.
• [5] E-commerce subsidy war impact, Reuters, Sep 20, 2025.
• [6] Qwen3-Max and chip development, Alibaba Tech Blog, Sep 22, 2025.
• [10] Taobao Instant Commerce growth, South China Morning Post, Sep 15, 2025.
• [14] Cathie Wood’s Alibaba holdings, ARK Invest filings, Sep 24, 2025.
• [21] Chip import restrictions, Nikkei Asia, Sep 18, 2025.
• [25] Q1 cloud revenue, Alibaba Q1 2026 earnings report.
• [26] Financial metrics, Morningstar, Sep 25, 2025.
• [27] Analyst expectations miss, Zacks Equity Research, Sep 24, 2025.
• [28] H2 growth forecast, Alibaba investor relations, Sep 25, 2025.
• [31] AI revenue share, IDC China Cloud Report, Q3 2025.
• [33] Share repurchase details, Alibaba SEC filings, Sep 2025.
• [36] Technical breakout analysis, TradingView, Sep 25, 2025.
• [40] Stochastic indicator, Investopedia technical data, Sep 25, 2025.
• [43] Support levels, StockCharts.com, Sep 25, 2025.
• [45] MA, RSI, MACD data, Finviz, Sep 25, 2025.
• [46] Current price, 52-week range, analyst targets, Yahoo Finance, Sep 25, 2025.
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