Author | Liu Baodan
Editor | Zhou Zhiyu
Riding on the tailwinds of policies and the market, Alibaba, which has been somewhat disappointed in the past three years, has swept away the past gloom and once again become a favorite of investors.
With a market value once reaching 2 trillion RMB and the stock price hitting a nearly two-year high, Alibaba, as the &#34;king of e-commerce,&#34; is experiencing its shining moment. Some investment banks have stated that Alibaba's valuation is returning, emphasizing the need to see Alibaba's long-term value.
Alibaba serves as a barometer for institutional investment in Chinese concept stocks. Over the past three years, regulatory headwinds and intensified competition in the e-commerce market have negatively impacted Alibaba's stock price; now, with Alibaba successfully completing its three-year rectification, its e-commerce business regaining momentum, and the second growth curve picking up speed, Alibaba is reigniting its fighting spirit to face the future with a new attitude.
This means that if the warmth in policies going forward can further boost the economy with greater intensity, Alibaba's fundamentals can also further recover.
Alibaba's vision is to become a century-old enterprise. After experiencing the glory of going public and setbacks in the past few years, Alibaba is climbing out of the trough, gradually shaking off past uncertainties, and ushering in a brand new beginning.
<h2>Restart</h2>
In the past month, Alibaba has performed well in the capital market. In September, the stock price rose by 27.33%, marking the best performance since November 2022.
As of October 15th, despite a recent pullback in stock prices, Alibaba's total market value has reached 1.75 trillion RMB, up over 58% from this year's low point. Year-to-date, Alibaba's stock price has also risen by 34.94%, outperforming the Hang Seng TECH Index (up 18.24%) during the same period.
Behind Alibaba's rapid stock price recovery, investors are reevaluating Alibaba. Before the National Day holiday, Goldman Sachs raised its preference for e-commerce in the Chinese internet industry subsector to the top two positions, tied with the gaming industry, believing that there is significant potential for value reassessment for companies like Alibaba in the e-commerce sector.
Even after the recent rapid rise, J.P. Morgan remains optimistic about Alibaba and has raised Alibaba's target price. J.P. Morgan analysts believe that Alibaba is the most attractive in the current Chinese e-commerce industry in terms of valuation.
Indeed, from a global e-commerce industry perspective, Chinese e-commerce companies, including Alibaba, are still undervalued. Currently, the average price-to-earnings ratio in the global e-commerce industry is around 25, while Alibaba's estimated price-to-earnings ratio for the next 12 months is around 13, indicating significant room for recovery.
A senior executive from a foreign investment bank told Wall Street News that the biggest change in the market this year is the higher correlation between stock prices and fundamentals in the Chinese market, coupled with increased buybacks or dividends by internet companies, which has boosted investors' risk appetite.
In May this year, Alibaba also issued a $4.5 billion convertible bond, a clear sign of overseas investors' warming attitude towards Chinese companies raising funds overseas. This also indicates that investors have been reevaluating Alibaba's value before this round of capital market surge.
With the announcement on August 30th that Alibaba's three-year rectification has come to an end, Alibaba has gained greater freedom.
On October 14th, Hang Seng Indexes Company announced that Alibaba has been included in the Hong Kong Stock Connect and meets the rapid inclusion requirements of relevant indexes. Alibaba will be included in the Hang Seng Hong Kong Stock Connect Index starting from October 28th
This is also its completion of the dual primary listing in Hong Kong on August 28th, after eleven years, achieving another milestone after obtaining independent pricing power for its stock. More investors, especially those from mainland China, can also buy Alibaba through the Hong Kong Stock Connect.
All of this lays the foundation for the revaluation of Alibaba's stock price. After more than three years of stagnation, Chinese concept stocks represented by Alibaba have finally resumed their upward trend.
<h2>Challenges</h2>
Undeniably, Alibaba is currently at a delicate juncture.
From the perspective of estimated price-to-earnings ratio, Alibaba's valuation is at a relatively high level over the past 12 months. If it wants to completely break free from the three-year slump and return to an upward trajectory, it also needs to break free from the constraints of valuation and regain investor confidence.
Alibaba, which once created a myth in the capital markets, needs a comprehensive victory to shine again.
In 2014, Alibaba set a record for Chinese internet companies in the global capital markets with a financing amount of $25 billion. On the day of its listing, Alibaba's market value reached $231.4 billion, surpassing Tencent and Amazon, second only to Apple, Google, and Microsoft. This was a huge victory for the Chinese e-commerce model in the capital markets.
In the following years, Alibaba's market value soared. In 2020, its market value reached its peak at $858.1 billion. However, after the peak, crisis loomed. With Chinese concept stocks mired in a slump for more than three years, intensified competition in the e-commerce market, and the likes of Pinduoduo and Douyin causing a significant drop in Alibaba's market share, Alibaba's market value continued to decline, and it was briefly surpassed by Pinduoduo at the end of last year.
Alibaba has also launched a series of counterattacks. In March last year, Alibaba initiated the largest-ever structural adjustment, splitting into six parts to enhance the competitiveness of its core e-commerce business, with cloud services, Cainiao, and others being spun off for separate listings. Although the restructuring faced obstacles, Alibaba gradually clarified its &#34;customer-first, AI-driven&#34; strategy. Meanwhile, a new generation of management represented by Joseph Tsai and Eddie Wu stepped into the forefront.
The company simultaneously embarked on capital management, boosting market confidence through buybacks, dividends, and management holding shares. Taking buybacks as an example, in the first quarter of the 2025 fiscal year, Alibaba repurchased a total of $5.8 billion, with $26.1 billion of the buyback plan still unused.
Now, Alibaba has stabilized the market situation. On the evening of August 15th, Alibaba released its financial report for the first quarter of the 2025 fiscal year, with Taobao's online GMV showing high single-digit year-on-year growth and double-digit year-on-year growth in order volume, mainly driven by the growth in the number of buyers and purchase frequency, especially boosted by the 618 promotion in the second quarter, achieving strong year-on-year growth in Taobao's online GMV.
JP Morgan is optimistic about the growth trend of Alibaba's domestic e-commerce gross merchandise volume (GMV), believing that Alibaba's narrative in the next 6-12 months will shift from being a &#34;market share relinquisher&#34; to a &#34;stable e-commerce growth stock,&#34; with the inclusion of the Hong Kong Stock Connect and accelerated growth in customer management revenue (CMR) being short-term catalysts.
For Alibaba, the core potential for stock growth still needs to return to business logic, especially with the fourth quarter promotion becoming a key juncture. On October 12th, Tmall announced that the Double 11 promotion will start at 8 p.m. on the 14th, with not only direct discounts and full reductions, but also increased industry category coupons, government subsidies, and a focus on providing discounts
AI will also bring more imagination to Alibaba's stock price. As the big player with the highest investment in AI, Alibaba has currently built a complete AI ecosystem, covering AI large models, cloud computing, e-commerce, and other scenarios. In addition to its internal AI ecosystem, Alibaba has also invested in startups such as Yue Zhi An Mian, Zhipu, and Zero One Wan Wu, making strategic moves in the field of AI.
At the previous Yunqi Conference, Eddie Wu also revealed Alibaba's understanding of AI for the first time. After using e-commerce to change the lives of the Chinese people, he hopes to continue changing the physical world in the AI era.
Eddie Wu frankly stated, &#34;AI has the ability to create, help solve complex problems for humans, and the path is clear, opening up the possibility of extensive AI applications in various industry scenarios.&#34;
Challenges are also evident. Domestic e-commerce is becoming more intense, competition is fiercer; AI remains hot, but currently unable to run through the business model, still in the early stages that look very promising, especially as AI technology continues to iterate, cost contradictions will become more prominent.
How to break through, the burden on Alibaba is getting heavier. But whether in e-commerce or AI, Alibaba must make further breakthroughs, gain more room for imagination, reflect in financial data, and make investors willing to give a higher valuation.
Today, the Internet industry has passed through the portal era and the mobile era, and the AI era representing the Fourth Industrial Revolution has quietly begun. Whether Alibaba can recreate the capital feast of the past, perhaps only by going all out, will it be qualified to give a good answer

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- Alibaba has rebounded in the capital market, with its market value reaching 1.75 trillion RMB, up over 58% from this year's low.  
- The company is regaining investor confidence following successful regulatory adjustments and a strong performance in e-commerce, with a notable 27.33% stock price increase in September.  
- However, Alibaba faces challenges in maintaining its valuation and competing in a crowded e-commerce landscape, while also needing to leverage AI advancements for future growth.

Alibaba returns to the center stage