Alibaba (BABA) Stock: Wall Street Backs AI Agent Strategy as Qwen App Gains Traction

TLDR

• Jefferies reaffirmed Buy rating with $225 price target as Alibaba’s Qwen app now integrates with Taobao, Alipay, Fliggy, and Amap for complete task automation
• Qwen app crossed 100 million monthly users in two months and handles over 400 daily tasks
• Alibaba Cloud holds 35.8% market share in AI Cloud revenue, ranking first and targeting 80% of incremental industry revenue growth in 2026
• Morgan Stanley maintains Overweight rating with $180 price target, citing consumer AI momentum despite near-term profit pressure from user acquisition spending
• Wall Street consensus shows Strong Buy rating with average price target of $203.66, implying 19.15% upside potential

Alibaba is drawing fresh support from Wall Street analysts who see the company’s AI initiatives moving from experimental to practical. The focus centers on Qwen, Alibaba’s AI app that now connects directly with the company’s core services.

Alibaba Group Holding Limited, BABA

Jefferies analyst Thomas Chong kept his Buy rating and $225 price target on the stock. He pointed to recent Qwen updates that link the app with Taobao, Alipay, Fliggy, and Amap. Users can now shop, order food, book travel, and make payments without leaving the app.

This marks a shift from AI that just answers questions to AI that actually completes tasks. Chong sees this as a real edge for Alibaba. The integration turns Qwen into a functional tool rather than a novelty.

The numbers back up the enthusiasm. Qwen hit 100 million monthly users in just two months. The app now handles more than 400 different daily tasks. These include quick commerce orders, shopping suggestions, trip planning, restaurant bookings, and access to over 50 public services through Alipay.

Cloud Business Shows Strong Market Position

Alibaba Cloud continues to lead the pack. The unit captured roughly 35.8% of AI Cloud revenue market share in the first half of 2025. That’s more than the second through fourth place competitors combined.

About 70% of Alibaba Cloud customers use both API services and GPU resources. Companies are using the platform to fine-tune AI models with their own data. Over 90% of enterprises haven’t yet adopted AI tools, leaving plenty of room for growth.

Omdia data projects AI revenue will jump 149% year-over-year. The forecast shows growth from 20.83 billion yuan in 2024 to 51.8 billion yuan in 2025. Alibaba Cloud aims to capture 80% of new industry revenue in 2026. Jefferies expects the company to keep posting triple-digit growth rates.

Morgan Stanley analyst Gary Yu maintained an Overweight rating with a $180 price target. He called consumer AI and task automation key themes for the year. Yu said Alibaba’s broad service portfolio gives Qwen a strong shot at becoming a go-to AI app.

Higher User Spending May Pressure Margins

The rapid user growth comes with costs. Alibaba is spending heavily to bring new users to the platform. Morgan Stanley noted this could weigh on profits in the short term. Yu still expects user activity gains and cloud growth to offset these pressures over time.

Chong from Jefferies highlighted momentum across the business. Many cloud customers already use both AI models and computing power. With most companies still early in their AI journey, he sees a long path for expansion.

The stock trades at $167.79 with a market cap of $379.84 billion. InvestingPro data shows the stock delivered a 109.54% return over the past year. The company carries a financial health score of 2.59, rated as “good.”

Wall Street shows broad confidence in the name. The consensus rating stands at Strong Buy based on 13 Buy ratings and one Hold over the past three months. The average price target sits at $203.66, pointing to roughly 19.15% upside from current levels.

Alibaba reports next earnings on February 19. Analysts will watch for updates on Qwen adoption rates and cloud revenue growth. The company’s PEG ratio of 0.42 suggests the stock may be undervalued relative to its growth rate.

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