Alibaba's Strategic Entry Point: Balancing Technical Bearishness and Fundamental Resilience in Q4 2025

Alibaba Group Holding (BABA) has experienced a complex trading environment in Q4 2025, marked by a bearish technical bias and mixed fundamental signals. While the stock remains under pressure from regulatory scrutiny and geopolitical headwinds, its valuation metrics and strategic investments in AI and cloud computing suggest a potential entry point for long-term investors willing to navigate short-term volatility.

Technical Analysis: A Bearish Trend with Oversold Conditions

As of December 29, 2025, Alibaba's stock is trading below key moving averages, including the 5-day ($150.39), 20-day ($154.01), and 50-day ($160.49) SMAs, confirming a sustained downtrend. The Relative Strength Index (RSI) stands at 31.64, indicating oversold conditions, though the absence of bullish divergence weakens the case for a strong reversal. The Moving Average Convergence Divergence (MACD) remains bearish, with the line below the signal line and a negative histogram, underscoring downward momentum.

Key support levels are identified at $146.75 (30-day low) and $146.58 (accumulated volume support), while resistance is expected around $150.00 and $152.24 (prior close). The stock's declining volume on the downside-a bearish signal-suggests a potential consolidation phase, though the ADX value of 15.3 indicates a weak trend, complicating directional bias. Analysts project a -13.53% decline over the next three months, with the 200-day SMA at $137.77 acting as a critical long-term support level.

Fundamental Resilience: Revenue Growth and Strategic AI Investments

Despite the technical headwinds, Alibaba's Q4 2025 fundamentals reveal resilience. The company reported a 7% year-on-year revenue increase, driven by its Cloud Intelligence Group, which saw 34% growth. AI-related revenue grew at triple-digit rates for the ninth consecutive quarter, signaling strong momentum in high-margin segments. However, profitability remains challenged, with non-GAAP net income declining 72% to $1.45 billion due to increased subsidies and AI infrastructure spending. Management has indicated that quick-commerce subsidy costs have likely peaked, hinting at improved cost efficiency in 2026.

Valuation metrics further highlight Alibaba's appeal. The stock trades at a trailing P/E of 18.3x and a forward P/E of 16.1x, significantly below the industry average of 32.9x. Its P/B ratio of 2.67 is lower than the Internet - Commerce sector average of 8.72, suggesting undervaluation relative to peers like Amazon (33.5x P/E) and MercadoLibre (52.79x P/E). However, the PEG ratio of 1.88 exceeds the sector average of 1.15, indicating that the stock's valuation may not fully reflect its earnings growth potential.

Catalysts and Risks: Navigating Regulatory and Strategic Shifts

Alibaba's Q4 rebound was partially fueled by strategic partnerships, including a collaboration with Xiaohongshu to integrate Taobao links into Rednote posts. The company also expanded its "instant commerce" model, aiming to deliver products within an hour, a move to counter competition from Pinduoduo and JD.com. Analysts from Mizuho, Bernstein, and Citi have upgraded their price targets, citing confidence in Alibaba's AI and cloud initiatives.

Yet, risks persist. Regulatory pressures, including antitrust investigations and geopolitical tensions, continue to weigh on sentiment. A -2.73% decline on December 29, 2025, followed reports of potential securities violations and concerns over the company's ties to Chinese military operations. These factors underscore the need for caution, as macroeconomic uncertainties could delay a full recovery.

Strategic Entry Point: Balancing Technical and Fundamental Signals

For investors considering Alibaba as a strategic entry point, the interplay between technical and fundamental signals is critical. The stock's oversold RSI and key support levels at $146.58–$146.75 present potential buying opportunities, particularly if volume increases on the upside to confirm a reversal. However, the bearish MACD and weak ADX suggest that any rebound may be short-lived without a broader shift in market sentiment.

Fundamentally, Alibaba's undervalued P/E and P/B ratios, coupled with its leadership in AI and cloud computing, offer long-term appeal. The company's forward-looking initiatives-such as domestic AI chip development-position it to reduce reliance on U.S. technology and scale its services. Investors should monitor the 200-day SMA at $137.77 as a critical threshold; a break below this level could trigger further declines, while a sustained rebound above $150.00 might signal a shift in momentum.

Conclusion

Alibaba's Q4 2025 performance reflects a tug-of-war between bearish technical indicators and resilient fundamentals. While regulatory and geopolitical risks remain, the company's strategic investments in AI and cloud computing, combined with attractive valuation metrics, suggest a compelling entry point for investors with a medium-term horizon. A disciplined approach-focusing on key support/resistance levels and monitoring earnings guidance-can help navigate the volatility and position for potential upside as Alibaba's long-term growth story unfolds.