Alibaba (NYSE:BABA) has been one of the standout performers in the stock market in 2025, with its shares climbing nearly 50% year-to-date. But with this massive rally, many investors are now questioning whether it’s too late to buy Alibaba stock. In this article, we’ll explore the key factors behind Alibaba’s recent rise and assess whether it’s a buy or sell after such a significant gain.

The Power Behind Alibaba’s Stock Surge

Alibaba’s stock rally in 2025 can be attributed to several key developments in both the company’s performance and the broader Chinese tech market.

Firstly, Alibaba has benefited from the renewed interest in Chinese stocks. After a few challenging years, including a government crackdown on tech companies and a slowdown in China’s economy, things are looking up. The Chinese government’s recent economic stimulus measures have sparked hopes of a recovery, and many investors are betting on China’s tech giants, including Alibaba, to lead the charge.

Secondly, the AI boom has also played a role in Alibaba’s stock surge. In particular, Alibaba’s Qwen 2.5-Max AI model recently outperformed DeepSeek-V3 and OpenAI’s GPT-4o on several key benchmarks. This has helped showcase Alibaba’s AI prowess and pushed the stock higher.

Alibaba’s impressive AI advancements have also attracted attention from global players, including Apple (NASDAQ:AAPL). Apple recently partnered with Alibaba to bring its AI-powered “Apple Intelligence” to iPhones in China. This partnership has been seen as a major endorsement of Alibaba’s AI capabilities, further boosting investor confidence.

The Impact of China’s Political Changes

Another factor driving Alibaba’s rally is the recent shift in China’s political stance toward tech companies. The Chinese government has moved to ease its crackdown on private sector tech companies, a reversal that benefits companies like Alibaba. Chinese President Xi Jinping recently held a meeting with tech entrepreneurs, including Alibaba co-founder Jack Ma, signaling that the government’s attitude toward tech regulation may be changing for the better.

This new political environment has sparked renewed optimism about the future of Chinese tech stocks, particularly Alibaba, which was once seen as the face of the crackdown.

Is It Too Late to Buy Alibaba Stock?

After a near 50% gain in 2025, many investors may be wondering if Alibaba stock has run too far ahead of itself. While the company’s recent growth is impressive, there are a few factors to consider before deciding whether to buy or sell.

Alibaba is set to release its earnings for fiscal Q3 2025 on February 20. Analysts are expecting a 7.4% year-over-year increase in revenue to $32.8 billion and a 2.8% increase in adjusted earnings per share. While these numbers are positive, Alibaba’s stock has already surged, making it more expensive compared to its historical valuation.

As of now, Alibaba trades at approximately 14 times its expected earnings over the next 12 months. This is a significant improvement over the low multiples seen during the company’s difficult period in 2021 but still below the valuation of U.S. competitors like Amazon (NASDAQ:AMZN).

The Long-Term Outlook for Alibaba

While Alibaba stock has surged in 2025, the company still faces some challenges. The U.S.-China trade tensions remain a concern, and China’s economy faces structural issues, such as high debt levels and an aging population. These factors could continue to weigh on the company’s growth prospects.

Despite these risks, Alibaba is undergoing a restructuring effort to unlock value from its various business segments, which could drive long-term growth. Investors may want to take a more cautious approach in the short term but consider Alibaba stock as a long-term play as it continues to capitalize on its strengths in AI and e-commerce.

Conclusion: Buy, Sell, or Hold?

Alibaba’s impressive performance in 2025 has left investors with a difficult decision. With its strong AI capabilities, improved political environment, and solid growth potential, Alibaba remains a key player in the Chinese tech space. However, the recent surge in its stock price means that it may not be the best time to buy at these elevated levels. For investors already holding Alibaba, it may be worth holding onto shares, but for those looking to enter, it may be better to wait for a pullback.

In the end, Alibaba’s long-term growth potential still looks promising, but it’s important for investors to weigh the risks and rewards before making a decision.

Featured Image: Megapixl

Please See Disclaimer