BABA Stock to Watch: Analysts Expect Q1 Earnings Breakout

Alibaba is set to release its Q1 2026 earnings on August 29, with analysts expecting $2.13 per share in earnings and $35.28 billion in revenue. The company's AI push and cloud growth are key growth drivers, while its international e-commerce arm is expected to turn profitable soon. Alibaba's valuation is discounted relative to peers, with a PEG ratio of 0.55 and some analysts seeing 50-70% undervaluation.

Alibaba is set to release its Q1 2026 earnings on August 29, with analysts expecting $2.13 per share in earnings and $35.28 billion in revenue. The company's AI push and cloud growth are key growth drivers, while its international e-commerce arm is expected to turn profitable soon. Alibaba's valuation is discounted relative to peers, with a PEG ratio of 0.55 and some analysts seeing 50-70% undervaluation.

The latest earnings momentum for Alibaba is driven by its cloud expansion and AI adoption, with analysts maintaining strong buy ratings ahead of Q1 FY26 results [1]. The company's international push in South Korea, Mexico, and Thailand underscores its global ambition. Yet, despite these advances, the $433.5 million settlement tied to Ant Group's failed IPO continues to weigh on investor confidence.

Alibaba's cloud revenue is rising on surging AI demand, supported by new data centers abroad. The Qwen3-Coder AI model is rapidly gaining share versus Google and Anthropic. The company has committed to spending RMB 50B near-term and RMB 380B over three years on AI [1]. Additionally, the company's strong balance sheet and eight consecutive quarters of buybacks bolster investor outlook.

However, the legal settlement still casts a shadow over Alibaba's growth story. The company agreed to a $433.5 million settlement to resolve claims tied to Ant Group's failed IPO and regulatory hurdles. While it closes litigation, investor skepticism over transparency and governance persists [1].

Alibaba's e-commerce arm generated $62B in FY2025, funding newer businesses despite slower revenue growth. The company's cloud business remains profitable, with triple-digit AI revenue growth for six straight quarters. Expanding food delivery with $7B in promotions, while maintaining a strong buyback program, further signals Alibaba's commitment to growth and investor returns [3].

Despite the challenges, Alibaba's valuation remains attractive, with shares trading at 14x current earnings and 11x forward earnings, signaling an attractive valuation [3]. The upcoming earnings report will provide further clarity on Alibaba's financial health and growth prospects.

References:
[1] https://www.tradingview.com/news/11thestate:c59c0eec4094b:0-baba-cloud-and-ai-fuel-growth-but-433-5m-ant-ipo-settlement-still-casts-shadow/
[2] https://chartsarefun.substack.com/p/alibaba-looks-poised-for-a-breakout
[3] https://www.tradingview.com/news/11thestate:7f4b30e15094b:0-baba-stock-outlook-improves-but-433-5m-ant-group-settlement-still-casts-a-shadow/