Sign InAlibaba Stock Analysis: Bearish Momentum Near Support with Strong Long-Term Growth Prospects Ahead
Summary
As of July 11, 2025, Alibaba's stock shows near-term bearish momentum despite strong fundamental valuation and a promising innovation pipeline, making it an attractive buy candidate as it approaches crucial support levels ahead of the upcoming earnings announcement on August 21.
Technical Analysis
Alibaba (BABA) closed July 11, 2025, at $106.72, showing marginal intraday stability with a 0.08% increase. The stock is trading below its 50-day moving average of $118.22 and just below the 200-day moving average of $108.85, indicating a near-term bearish momentum with possible support testing near $106.64. The Relative Strength Index (RSI) at 37 suggests the stock is approaching oversold territory but not yet deeply so, hinting at limited downside but no clear bullish reversal yet. The MACD remains negative (-2.67), reinforcing the ongoing downward momentum in the medium term. Average true range (ATR) of $2.75 points to moderate volatility. Resistance stands firm around $113.97, a level that must be breached to signal a recovery. Volume on the last session was below average, at 10.61 million versus 13.81 million, suggesting reduced trading enthusiasm but no panic selling.
For the next trading day (July 14, 2025), the price is likely to hover near the current levels with tight intraday ranges between the immediate support at $106.64 and resistance near $108.85 (200 DMA). Over the next week, a break above the 200-day moving average ($108.85) will be critical for a short-term rebound attempt toward the $113.97 resistance zone. Failure to hold support could trigger a decline toward the yearly lows (~$73.87) in a worst-case scenario, given that the stock remains far from its 50-day MA and the MACD remains bearish.
Fundamental Analysis
Alibaba’s market capitalization stands at approximately $258.16 billion, reflecting its heavyweight status in the e-commerce and cloud computing space. The trailing twelve months (TTM) EPS of $9.07 and a forward P/E of 11.93 indicate the stock is trading at a relative discount compared to peers in global tech and retail sectors, which often operate with P/E multiples in the mid-teens to 20s. This suggests potential undervaluation, especially given Alibaba’s strong earnings power.
Dividend yield of 1.86% (TTM based) provides a modest income stream, adding to total shareholder returns in a low-yield environment. The upcoming earnings announcement on August 21, 2025, is a material catalyst that could pivot sentiment in either direction depending upon growth visibility and U.S.-China geopolitical developments.
Recent positive news surrounding Alibaba-backed Moonshot’s release of the Kimi K2 AI model, outperforming even leading AI coding models like GPT-4.1 and Claude, signals strong innovation momentum in Alibaba’s ecosystem, enhancing long-term growth prospects in AI and cloud-based services. Additionally, commentary on improving U.S.-China relations could reduce macro uncertainty, unlocking value that has been priced out due to geopolitical risks.
Analyst consensus remains bullish with a consensus target price of $173.33, representing over 60% upside from current levels. The majority rating is “Buy” with 50 out of 57 covering analysts favoring accumulation and only one "Sell." This strong fundamental and sentiment backdrop provides a favorable setup for medium to long-term appreciation.
Intrinsic Value and Long-Term Investment Potential
The TTM P/E of 11.93 combined with steady EPS growth supports an intrinsic valuation comfortably above the current price, likely in the $160–180 range, aligning well with analyst targets. Alibaba’s dominant market position, scale in China’s e-commerce sector, ongoing AI technology integration, and improved regulatory clarity underpin a strong moat and sustainable earnings growth. While geopolitical risk persists, managed strategic competition mixed with innovation-driven expansion validates Alibaba as a core holding for long-term capital appreciation.
Dividend payments, though modest, add to the investment’s attractiveness by offsetting some volatility in price. The long-term risk-reward profile remains weighted toward upside, assuming easing geopolitical tensions and continued technological advancement.
Overall Evaluation
Alibaba stock is categorized as a Buy candidate. Despite near-term technical weakness and trading below moving averages, the fundamental valuation is compelling, the innovation pipeline is strong, and improving macro conditions could serve as a catalyst. The risk factors related to geopolitical uncertainty and regulatory environment remain, but these are largely priced in, creating an asymmetric payoff potential. The current price level near strong support provides an attractive entry point for accumulation ahead of earnings and potential market repricing of Chinese tech equities.
