Prediction: Alibaba will double its value in the next 3 years. Here is the reason.

Key points

• Alibaba is experiencing strong momentum in its cloud business, primarily driven by the growing demand for AI products and services.

• “Quick trading” is also emerging as a significant catalyst for growth.

• Alibaba trades at significantly lower valuation multiples compared to its competitors and its own historical averages.

2025 has been a challenging year for many Chinese tech stocks. China's economy has been slowing down. In the second quarter of 2025, China's GDP grew by 5.2% year-on-year, down from 5.4% in the first quarter. Retail sales and real estate investment also weakened, leaving many investors cautious. This outlook seems to be heavily weighing on the valuations of many Chinese stocks.

Despite this, some companies based in China still offer significant upside potential. Alibaba Group Holding is one of them. Although it did not meet consensus revenue and earnings estimates in the recent quarter, the company deserves a more detailed analysis. I foresee that it will double its value in the next three years, and there is something in particular that fuels my optimism.

AI + Cloud

The rapid momentum in Alibaba's cloud and artificial intelligence business is the key factor that could drive the growth of its stock price. Revenue from Alibaba's Cloud Intelligence Group increased by 26% year-on-year to nearly $4.7 billion in the last quarter, with AI-related sales growing at triple-digit rates. AI has maintained this strong growth rate for eight consecutive quarters, driven by the accelerated development of AI applications and rapid adoption by enterprise customers.

To support this growth, Alibaba plans to invest 380 billion renminbi (approximately $52.5 billion) over the next three years in cloud and AI infrastructure. The company invested 38.6 billion RMB in the recent quarter and more than 100 billion in the last four quarters, primarily to expand AI capacity and product development.

The Chinese data center market is expected to grow from $16.4 billion in 2024 to $32.2 billion in 2030. In the first quarter of 2025, Alibaba accounted for approximately 33% of cloud infrastructure service spending in China, while Huawei and Tencent accounted for 18% and 10%, respectively.

International markets

Alibaba is also focusing on diversifying its revenue base beyond China. The company has announced new data centers in Malaysia and the Philippines, and recently launched a global AI innovation center in Singapore to support more than 5,000 businesses and 100,000 developers.

Main e-commerce business

Although AI and the cloud are key catalysts, Alibaba's traditional e-commerce business continues to deliver strong growth. E-commerce revenues in China grew by 10% year-on-year to 140.1 billion RMB in the first quarter.

The company is also doubling down on the Chinese fast commerce market — deliveries in less than an hour — which is estimated to grow from $92.7 billion in 2025 to $135.5 billion by 2030. The fast commerce business on its Taobao app had nearly 300 million monthly active users in August 2025, with daily orders peaking at 120 million.

There are some risks

Certain risks cannot be ignored. With the slowdown of the Chinese economy and consumers under pressure, the company's e-commerce business may face stagnation. The competition in fast commerce from players like Meituan and Kuaishou remains fierce. Additionally, fast commerce also requires higher capital expenditure to expand the base of delivery personnel and warehouses.

The growing uncertainties in the global chip supply could also pose a challenge to Alibaba's plans to expand data center capacity. However, Alibaba has developed its own inference chip to reduce its reliance on American manufacturers.

The valuation is reasonable

Alibaba's valuation also leaves a lot of room for upside. The stock is trading 56% below its all-time high of $307.80 in October 2020, due to increasing regulatory pressures and concerns about slowing growth. The company is currently trading at 14 times future earnings estimates, well below its five-year historical average of 26.6. On the other hand, e-commerce competitors like Amazon and MercadoLibre are trading at price-to-earnings ratios of 34.6 and 46.5, respectively.

I believe it is evident that even without unrealistic assumptions, Alibaba's stock can double by 2028.