Alibaba Shares Soar 70% in 2025: Is AI Enthusiasm Fueling a New Growth Era?

Alibaba Group (NYSE: BABA) is catching the eye of investors yet again, with its shares skyrocketing nearly 70% since the start of 2025. This remarkable surge is largely attributed to the growing enthusiasm surrounding artificial intelligence developments in China. The excitement around Alibaba was further heightened when founder Jack Ma made a rare public appearance on February 17, sitting front and center at a meeting where Chinese President Xi Jinping engaged with various entrepreneurs, including Liang Wenfeng of DeepSeek.

As optimism builds, analysts are weighing in on Alibaba’s trajectory. Jefferies recently announced a price target of $156 for the stock, indicating an expected upside of over 8% from its last closing price of $143.75. Yet, recent reports reveal that sales through Taobao and Tmall have rebounded with a 5% increase in the latest quarter, showcasing Alibaba's resilience in its core e-commerce sector.

While the frenzy around AI stocks in China has intensified, UBS highlighted that the relative crowding into these investments has only increased slightly by 0.02 this year, starkly contrasting the 0.2 jump observed in U.S. AI stocks over the past two years. Despite this, Alibaba leads the crowding score among major Chinese tech firms, suggesting a healthy level of investor interest.

Looking ahead, JPMorgan’s internet analyst, Alex Yao, remains optimistic about Alibaba, downplaying the notion of shifting investment focus to other lagging AI players like Tencent and Baidu at this time. Yao points out that the share prices of these competitors could fluctuate based on AI advancements but pose different risk levels. In the wake of Baidu's recent report that its AI Cloud revenue rose by 26% year-on-year, its U.S.-listed shares have seen an uptick of around 8% this year. Meanwhile, Tencent's shares have experienced a robust 24% boost since January, yet they have yet to release their earnings for the current period.

JPMorgan maintains a neutral stance on Baidu but has positioned itself positively toward both Tencent and Alibaba, assigning a target price of $125 for Alibaba, which suggests a potential decline of 13% from the stock’s last price point. On the contrary, Morgan Stanley adopts a more cautious approach, delivering an equal-weight rating with a target of $100. Such a forecast implies a significant 30% drop, attributing concerns to increased capital expenditures, which accounted for 11% of revenue in the most recent quarter—up from just 3% previously—as well as potential risks from sluggish consumer spending and digital transformation.