Leo Sun, The Motley Fool

Wed, May 14, 2025, 7:00 AM5 min read

• Alibaba's core e-commerce and cloud businesses are stabilizing.

• Its artificial intelligence ecosystem is rapidly expanding.

• A trade deal between the U.S. and China could send its stock soaring.

• 10 stocks we like better than Alibaba Group ›

Alibaba Group Holding (NYSE: BABA), the largest e-commerce and cloud company in China, might seem like a risky stock to buy amid the rising tariffs and intensifying trade wars. However, its stock has actually risen nearly 50% since the beginning of the year as it impressed investors with the stabilization of its e-commerce business and the growth of its cloud and AI platforms.

But even after that rally, Alibaba's stock remains nearly 60% below its all-time high from October 2020. Let's review four reasons Alibaba could head higher -- and why it's still worth buying.

Alibaba suffered a major slowdown in fiscal 2022 and 2023 (which ended in March 2023). Its e-commerce business struggled with new antitrust restrictions, intense competition from aggressive competitors like PDD Holdings, and China's sluggish economic growth. Its cloud business also faced tougher macro and competitive headwinds.

Data source: Alibaba. FY=fiscal year.

But over the past two years, Alibaba's top line growth stabilized. It offset the slower growth of its Taobao and Tmall marketplaces in China by expanding its overseas marketplaces -- Lazada in Southeast Asia, Trendyol in Turkey, and AliExpress for its cross-border sales -- and its Cainiao logistics business. Its cloud business is also growing again as the artificial intelligence (AI) market expands.

As China's largest cloud infrastructure services provider, Alibaba has plenty of bricks to build its own AI ecosystem. That's why it launched Qwen, its new family of large language models (LLMs), to support the market's new generative AI applications two years ago.

Alibaba launched its latest version, Qwen3, in late April. In most benchmarks, it's comparable to American-developed LLMs like OpenAI's ChatGPT 4.5/o4-mini, Anthropic's Claude 3 Opus, Alphabet's Gemini 1.5 Pro, and Meta Platforms' Llama 3. Unlike ChatGPT, Claude, and Gemini, Qwen is a fully open-source platform. Qwen can also run its small to medium LLMs across a broad range of Nvidia's GPUs, including its midrange PC chips, which aren't subject to the U.S. export curbs against China.