Alibaba's AI Business Is Undervalued: Report

Alibaba Group Holding Limited (NYSE:BABA) shares tick higher during Thursday’s premarket session after fresh commentary framed the company’s artificial intelligence efforts as underappreciated by the market. AI Potential Seen As Underappreciated Bloomberg reported on Thursday that investors still view Alibaba mainly as an e-commerce story, even as AI becomes a bigger part of the long-term setup. First Eagle told Bloomberg that Alibaba’s current share price largely reflects its e-commerce business while overlooking the value of its AI operations. The fund manager noted that Alibaba’s core retail business provides a margin of safety, while its AI segment offers additional upside that the market is not fully pricing in. Despite recent pressure on Chinese tech stocks and a decline in Alibaba’s share price, the firm sees the setup as attractive. First Eagle also highlighted Alibaba’s broad AI capabilities across infrastructure, proprietary, and open-source models, suggesting that the business could become a significant and profitable growth driver over time. Price Hikes Signal Monetization Push Reportedly, Alibaba is raising prices across parts of its AI business as strong demand allows it to monetize its investments more aggressively. The company said it will hike prices for its T-Head AI chips by 5% to 34% and raise rates for its cloud storage service by 30%. The changes apply to products such as the Zhenwu 810E chip. The move signals Alibaba’s effort to turn heavy AI spending into near-term revenue, especially ahead of its upcoming earnings report. It follows a recent internal restructuring aimed at making AI a larger contributor to profits. Technical Analysis Alibaba is trading 4.44% below its 20-day SMA ($140.73) and 14.29% below its 100-day SMA ($156.92), keeping the intermediate trend pointed lower. Shares are down 6.12% over the past 12 months and sit closer to the middle of the $95.73 to $192.67 52-week range than either extreme. RSI is at 34.48, which sits in neutral territory but is leaning toward the “washed-out” side after the late-February oversold signal (RSI RSI in the 30–50 range with bullish MACD indicates momentum leaning bullish. Key Resistance: $141.00 Key Support: $134.50 Analyst Outlook The stock carries a Buy Rating with an average price target of $188.69. Recent analyst moves include: Jefferies: Buy (Lowers Target to $225.00) (Jan. 8) Freedom Capital Markets: Downgraded to Hold (Jan. 6) Citigroup: Buy (Raises Target to $225.00) (Nov. 26, 2025) Top ETF Exposure SPDR NYSE Technology ETF (NYSE:XNTK): 3.53% Weight Robo Global Artificial Intelligence ETF (NYSE:THNQ): 2.57% Weight Nomura Focused Emerging Markets Equity ETF (NASDAQ:EMEQ): 4.57% Weight Significance: Because BABA carries significant weight in these funds, any significant inflows or outflows will likely trigger automatic buying or selling of the stock. BABA Stock Price Activity: Alibaba shares were up 0.04% at $134.48 during premarket trading on Thursday, according to Benzinga Pro data. Image via Shutterstock