Unlocking Alibaba's Hidden Treasure: Ant International's Surge and the Path to Fair Value

Alibaba Group’s (BABA) valuation conundrum has long divided investors: Wall Street analysts see a $160.40 price target, while GuruFocus estimates a conservative $110.12 fair value. The gap, however, may be narrowing faster than expected. Ant International, the overseas arm of Ant Group, has reported a $3 billion revenue surge, positioning it as Alibaba’s most compelling catalyst to bridge this valuation chasm. Here’s why this spinoff could finally justify the bulls’ optimism—and why now is the time to act.

Ant International: The Growth Engine Alibaba Needs

Ant International’s overseas operations—handling cross-border payments, digital wallets, and fintech solutions—have delivered triple-digit AI-driven revenue growth for seven consecutive quarters, according to Alibaba’s May 2025 earnings. This division now accounts for 15% of Alibaba’s total revenue, with margins expanding as it scales. The $3 billion revenue milestone underscores its resilience in global markets, even as macroeconomic headwinds pressure Alibaba’s core e-commerce business.

Crucially, Ant’s success is not merely incremental—it represents a strategic pivot toward high-margin tech services. Consider this:

While traditional e-commerce faces margin compression, Ant’s AI-powered solutions (e.g., Qwen-driven payment systems) are commanding premium pricing. This shift aligns with Wall Street’s bullish thesis: Alibaba’s true value lies in its tech transformation, not its historical retail dominance.

The Analysts vs. GuruFocus: A Battle of Time Horizons

GuruFocus’s $110.12 valuation reflects near-term concerns:
1. Cash flow volatility: Alibaba’s free cash flow dropped 76% YoY in Q4 2025 due to cloud infrastructure investments.
2. Regulatory risks: U.S.-China tensions threaten partnerships like Apple’s AI collaboration with Ant.
3. Shareholder returns: Despite $16.5 billion in dividends and buybacks, GuruFocus assumes these won’t offset near-term losses in Ant’s AIDC division.

Analysts, however, are focused on long-term revaluation opportunities:
- Ant’s planned Hong Kong listing could unlock $20–30 billion in value for Alibaba shareholders, akin to how Alibaba’s own IPO re-rated its parent company.
- AI’s scalability: Ant’s Qwen-based tools (with 300 million downloads) are now monetized via SaaS models, creating recurring revenue streams.

The $160.40 analyst average (vs. GuruFocus’s $110.12) thus hinges on a critical assumption: Ant’s spinoff will re-rate Alibaba’s entire portfolio, not just its balance sheet.

Why the Spinoff Could Be a Game-Changer

Ant’s Hong Kong listing—expected in late 2025—will separate its growth from Alibaba’s parent company risks, addressing two key investor concerns:

1. Regulatory clarity: Ant’s overseas division operates outside China’s strict fintech regulations, reducing geopolitical overhang.
2. Valuation disconnect: Alibaba’s stock trades at just 17.8x forward P/E, far below the 30–40x multiples tech peers like Amazon or Tencent command. Ant’s listing could force a multiple expansion, as investors price in its standalone potential.

Consider this:

Alibaba’s discount persists despite its AI and cloud leadership. Ant’s spinoff could finally close this gap.

The Bottom Line: Buy BABA Now—The Catalyst Is Here

The $50+ spread between analysts and GuruFocus is not a flaw—it’s an opportunity. GuruFocus’s caution is valid in the short term, but Ant International’s $3 billion surge and impending spinoff create asymmetric upside:
- Upside: A successful Hong Kong listing could push BABA to $180+, rewarding investors with a 60% gain from current levels.
- Downside: Even if growth slows, Alibaba’s $50 billion net cash pile and shareholder returns provide a safety net.

The skeptics will cite margin pressures or macro risks, but they’re ignoring Ant’s exponential growth trajectory. This is a once-in-a-decade chance to buy a tech giant at a retail price—act before the spinoff’s value becomes undeniable.

Final Call: Buy Alibaba (BABA) now. The gap to fair value is closing—and the best days are ahead.