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Special Report Alibaba Stock Is Getting Hit Again, but Qwen and Cloud Growth Are SurgingAuthored by Leo Miller. Published: 3/20/2026. 
Key Points - Alibaba’s latest quarter showed modest revenue growth but a sharp drop in adjusted profit as the company continued spending heavily to defend its China commerce position.
- Cloud revenue growth accelerated, reflecting strong demand for AI-related products, even as broader concerns persist about talent retention and longer-term AI execution.
- Alibaba’s outlook hinges on whether near-term margin pressure from fast delivery and other initiatives can be balanced by sustained cloud and AI monetization.
- Special Report: Elon Musk already made me a "wealthy man"
For Chinese e-commerce giant and cloud provider Alibaba Group (NYSE: BABA), the past six months have not been kind. Over that period, Alibaba shares have fallen more than 30%. Market-share losses in Chinese e-commerce and questions about the company's artificial intelligence (AI) leadership have been significant headwinds for the stock. I've worked for the CIA, personally met four US presidents, and spent 45 years studying the markets—calling Black Monday six weeks before it happened, predicting the fall of the Berlin Wall, and pinpointing the exact bottom in 2009. But what I'm about to share with you is the boldest prediction of my career. After meeting Elon Musk face-to-face at a private gathering of Wall Street elites and months of my own research, I'm now staking my reputation on one date: March 26, 2026. That's when I believe Elon will announce the SpaceX IPO—what Bloomberg is calling the biggest listing of all time. I have found an access code that lets you grab a pre-IPO stake before it happens, but in 72 hours, your window could close. Click here to see how to claim your SpaceX access code The stock's decline was further exacerbated by Alibaba's latest earnings report, which sent shares down roughly 7%. Still, Alibaba remains one of China's most important companies and a meaningful AI player via its cloud business. That combination makes it hard to ignore despite the recent rough stretch for the stock. The latest quarter clarified the strategy: Alibaba is spending aggressively to defend its commerce franchise now, betting that accelerating cloud and AI demand can restore profitability over time. Margin Pressure Deepens as Fast Delivery Spending Rises In fiscal Q3 2026, Alibaba reported revenue of $40.73 billion, up 2% year-over-year (YOY). This modestly missed estimates of $40.95 billion, which implied about 3% growth. The bigger issue was earnings. Alibaba posted adjusted earnings of $1.01 per ADR, missing the analyst estimate of $1.65 and falling 67% from a year ago. An ADR, or American depositary receipt, is a bank-issued U.S. security that represents Alibaba's underlying shares and lets U.S. investors trade the stock in dollars on U.S. exchanges. Management attributed the profit decline to heavier spending on quick commerce, user-experience initiatives and technology, with improved cloud performance only partially offsetting the impact. The company is also operating in a tougher competitive environment in Chinese e-commerce, which has increased the cost of defending market share. PDD (NASDAQ: PDD) has been gaining ground in the value shopping market, while ByteDance's Douyin (the Chinese version of TikTok) has become a leader in discovery-based shopping, where users buy after seeing products in social feeds. Meanwhile, Meituan (OTCMKTS: MPNGF) remains dominant in food delivery and related services. Alibaba is still the largest player, but defending that position requires sizable investment and is weighing on profitability. Quick commerce — delivering products in an hour or less — has become a "cornerstone" of its e-commerce business. There are signs this growth-focused strategy is gaining traction: quick commerce revenue rose 56% YOY during the quarter. The company added 150 million annual active customers (AAC) in 2025 — users who made at least one purchase during the year — but many of these customers tend to make smaller and less frequent purchases. Alibaba is betting on winning this battle over the long haul and does not expect its quick commerce business to be profitable until fiscal 2029. Cloud Growth Accelerates as Qwen Sees Strong Developer Adoption Alibaba's Cloud Intelligence Group provided one of the clearest positives in the quarter. Revenue rose 36% YOY to $6.19 billion, marking the unit's ninth consecutive quarter of accelerating growth and its fastest pace in three years. Management pointed to AI demand as a key driver, with AI-related product revenue growing at a triple-digit rate for the 10th straight quarter. The segment also remained profitable, with an adjusted EBITA margin that was "relatively stable" at 9%. Qwen, the company's foundational model, is the most widely used open-source model on Hugging Face, with over 1 billion downloads. Hugging Face is a platform where developers can download and tune models to build applications. That open-source adoption matters because broader developer usage can translate into demand for inference and tooling within Alibaba's cloud ecosystem. As more developers build on Qwen, more usage shifts to running and serving those models at scale through inference and related tooling. Hugging Face also shows Qwen is a popular base for customization, with developers creating more than 113,000 derivative models tuned from Qwen. That is more than the next two closest competitors, Alphabet's (NASDAQ: GOOGL) Google and Meta Platforms (NASDAQ: META), combined. The takeaway is straightforward: Qwen has gained significant traction with developers, and that traction can help support growth in Alibaba's cloud business as more applications are deployed and used. Alibaba has set ambitious targets for its cloud and AI push. CEO Eddie Wu has said the company is targeting more than $100 billion in combined external cloud and AI revenue within five years, underscoring how central AI monetization has become to the long-term plan. Alibaba's Solid Balance Sheet Helps Fund Longer-Term Priorities Notably, Alibaba's free cash flow has been negative in many recent quarters. In the past nine months, free cash flow was negative $4.2 billion. However, the figure returned to positive this quarter at $1.62 billion. Despite the cash outflows, Alibaba's balance sheet remains strong. The company reports cash and other liquid investments of $80.1 billion and debt of about $37 billion, giving it considerable flexibility to continue investing in strategic priorities. The company did not address the recent resignation of Qwen's head of artificial intelligence, Lin Junyang. Any further changes in top AI leadership will be important to watch, as they could signal whether Alibaba can maintain its strong position. Alibaba clearly has high hopes for its long-term future. Near-term issues are weighing on its e-commerce business, but impressive progress in AI supports the company's outlook. With AI monetization still in relatively early stages and shares down significantly, the risk-reward for BABA shares looks attractive going forward. | 
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