US Tiger Securities downgrades Alibaba stock to Hold amid sharp rally

Investing.com - US Tiger Securities downgraded Alibaba (NYSE:BABA) from Buy to Hold on Thursday, while simultaneously raising its price target to $180 from $145. According to InvestingPro data, the stock is currently trading near Fair Value, with a market capitalization of $393.9 billion.

The firm cited Alibaba’s exceptional performance in 2025, with InvestingPro showing a precise 111.57% year-to-date return and over 40% in the past month alone. Trading at $176.44, with a P/E ratio of 16.3x and EV/EBITDA of 11.6x, the stock recently gained more than 8% intraday following multiple positive developments, including the unveiling of Qwen3-Max, a large language model with over 1 trillion parameters.

Alibaba also announced plans to increase its AI spending beyond the original 380 billion yuan (approximately $53 billion) commitment and revealed a new strategic collaboration with Nvidia to integrate AI tools and support robotics development. The company’s GREAT Financial Health Score of 3.0 on InvestingPro suggests strong capability to fund these investments, supported by $139.7 billion in trailing twelve-month revenue.

US Tiger Securities noted that Alibaba’s valuation no longer trades at a discount to U.S. peers. According to FactSet data cited by the firm, BABA now trades at 13.3x next-twelve-months EV/EBITDA, essentially in line with Amazon’s 13.0x, eliminating the valuation cushion that previously supported the Buy rating.

While maintaining a constructive view on Alibaba’s long-term trajectory in AI, cloud, and platform investments, the firm believes much of the upside has already been priced in following the recent rally, making shares more vulnerable to near-term downside risk.

In other recent news, Alibaba Group Holding Ltd reported its financial results for the first quarter of 2025, showcasing a 10% increase in revenue to RMB 247.7 billion. The company also saw a significant 76% rise in GAAP net income. However, Alibaba experienced a 14% decline in adjusted EBITDA and reported a free cash flow outflow of RMB 18.8 billion. In analyst updates, Jefferies raised its price target for Alibaba to $178.00 from $165.00, maintaining a Buy rating. Jefferies cited strong execution in Alibaba’s cloud business and its one-stop consumption platform as key factors for this decision. These developments reflect the company’s ongoing adjustments and strategic focus in the current market landscape.

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