To The Moon

$Alibaba(BABA)$ stock price rises after Citibank analyst raised its price target multiple times in 2025, but we saw BABA lost 4.11% on 09 Oct and further 2.19% on 10 Oct 24-hours trading.

So I think we need to understand these questions, are investors losing confidence, given the recent ~4.1% drop on 9 Oct and ~2.2% drop on 10 Oct (24-hour) in BABA? Does Alibaba have a moat and enough upside to reach the ~$218 + price targets (e.g., from Citibank raising the target) given the risks?

What Is Positive / Support For The Upside Thesis

Citi recently raised their target for BABA to US$217 from US$187, while reiterating a Buy rating. They cited stronger cloud / data-centre capex assumptions as a driver.

Alibaba is often assessed as a “wide moat” company. For example, one moat-analysis source lists Alibaba as having a wide economic moat, supported by strong network effects, switching costs, and brand strength.

Alibaba’s cloud & AI business are key upside engines: e.g., Alibaba Cloud reported meaningful growth in AI-related products.

On valuation, some screens peg the company as undervalued vs peers: e.g., one site found BABA’s P/E ~18.8× vs peer average ~44×.

Based on these, I would say there is a credible upside story: cloud/AI growth, wide moat, improving fundamentals.

What Is Weighing On The Company / What Are The Risks?

Revenue growth has been slowing. For example: annual revenue for FY2025 was ~$137.3 billion, only ~5.3% year-over-year growth.

Free cash flow has been volatile: While e.g. free cash flow was ~$29.18 billion in 2023, dropped significantly in 2024 (~$20.9 billion) and ~2025 estimate ~$22.9 billion.

Chinese tech regulatory / macro risks still loom. For example, a commentary noted that while firms like Alibaba are ramping AI/cloud investment, China’s AI budgets are still “slim” vs U.S., which could constrain full upside.

Competitive pressures: Alibaba’s quick-commerce, on-demand services are under pressure (e.g., from rivals like Meituan) and margin pressure exists.

Sentiment / valuation risk: Even if fundamentals improve, much of the upside is priced in when analysts raise targets. If execution or macro disappoints, downside risk remains.

So What About Investor Confidence And The Recent Drop?

The recent share-price drop (~4.1% on 9 Oct, ~2.2% on 10 Oct) may reflect short-term sentiment / macro risk rather than a collapse of the long-term thesis. For example, news articles highlighted that the drop occurred even though analysts remain largely bullish.

It could signal that some investors are taking profits or reducing exposure because the upside has become more uncertain or more “priced in”.

It could also reflect worries about near-term growth, e.g., slower consumer spending in China, margin pressure, or waiting for next earnings/quarterly update.

But we do not believe it means the upside story is dead — but confidence may be tempered. The market might be shifting from “big upside surprise” mode to “must execute to justify valuation” mode.

Can Alibaba Reach ~US$218 (or Higher) and Is That Justified?

Let’s assess the plausibility:

Upside Scenario (bullish):

• If the cloud/AI business grows at a high rate, margins improve, and consumer commerce holds up, the wide moat plus low valuation multiple (compared to peers) give upside.

• With price targets in the US$200-230 range (Jefferies ~US$230, Citi ~US$217) this shows analyst conviction.

• If investor sentiment around China tech improves (regulation, macro) that could unlock further upside beyond just fundamentals.

Base/Moderate Scenario:

• Revenue continues low-single-digit growth, cloud/AI grows faster but remains a modest portion of total revenue, margin improvement slow.

• The stock may still appreciate but more modestly (e.g., US$160-180 region) rather than US$218.

Bear/Execution Risk Scenario:

• Cloud/AI spending runs ahead of returns, competition intensifies, regulatory or macro headwinds bite — then valuation could compress, and targets may pull back.

We lean toward a base-to-bullish outcome if execution is strong. Reaching US$218 is possible, but we need to be aware that it is not a sure thing. It will require the key growth engines (cloud/AI) to kick into much higher gear and for the broader Chinese tech environment to remain favourable.

How We Can Think About It

Alibaba still has structural advantages (moat, ecosystem, diversification) that support the long-term upside.

Yes, the raised price targets reflect that potential.

But, the recent drop signals that the market is more cautious now — upside is more about execution and less about just “narrative”.

If you are an investors or planning to invest, you might want to ask: Do I believe Alibaba can accelerate cloud/AI growth + maintain core commerce strength + avoid macro/regulation blows?

So if yes → upside potential makes sense. If no → downside risk is meaningful.

In the next section we pulled together the recent major analyst price targets we could find, calculated the required % move from the current price (reference = $173.68, latest quote).

Using that we went on to build a simple scenario table (Bull / Base / Bear) that maps price targets → required price moves and the high-level execution assumptions that would be needed to reach those targets.

Major Analyst Price Targets (selected, recent)

Note: different services aggregate slightly different sets of analysts and give different averages/ranges. The high end of published targets is in the $230–$240 area (Jefferies, JP Morgan), while some legacy houses (Goldman) are more conservative (~$163).

Scenario modelling table — Bull / Base / Bear (price target, required move, what would need to happen)

Summary Of How Each Scenario Implies For Investors

Bull (~$230+): requires Alibaba to deliver clear, sustained acceleration in cloud/AI revenue and margin expansion, plus a friendly sentiment backdrop for China tech. This is what Jefferies / Citi appear to be baking in (they cite stronger cloud assumptions).

Base (consensus ~$186–192): assumes incremental cloud strength but still modest overall consolidation in core commerce — reasonable if Alibaba executes but doesn’t massively reaccelerate.

Bear (~$163 or lower): would follow either a near-term earnings miss, renewed regulatory headlines, or a macro slowdown in China that compresses multiples and slows cloud monetization.

What To Watch Next (Focus On Practical Catalysts)

Quarterly results / guidance — cloud revenue growth and margins, e.g., any acceleration in AI-related cloud bookings (Citi and Jefferies specifically point to cloud as the key driver).

Apsara / product announcements — evidence of enterprise adoption and data center capex commitments.

China macro & regulatory headlines — any sign of tightening or renewed regulation can quickly reprice risk premia.

Margins & loss trajectory at quick commerce — if losses shrink faster than expected, that removes a material valuation overhang.

Summary

Despite a recent downturn, with Alibaba's (BABA) stock falling over 6% on October 9th and 10th, 2025, this appears to be a short-term fluctuation rather than a significant loss of investor confidence. The decline coincided with a broader drop in the Nasdaq Golden Dragon China Index and a notable share sale by an institutional investor.

Citibank raised its price target to the $216-$217 range in late September and early October, citing Alibaba's strong potential in AI and cloud computing. Overall analyst sentiment remains bullish, with a "Strong Buy" consensus.

Alibaba's "wide economic moat" is underpinned by its dominant e-commerce ecosystem, which creates powerful network effects, and its leadership position in China's cloud computing market. The company's significant investments in AI are expected to be a key future growth driver. While facing challenges, this robust competitive advantage and focus on high-growth sectors suggest that Alibaba has the potential to overcome short-term market volatility and strive towards its higher price targets.

Appreciate if you could share your thoughts in the comment section whether you think BABA could still aim for the higher analyst price target expectations even though share have decline with positive expectations given.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.