Alibaba (BABA) Stock Downgraded to Hold After Strong AI-Driven Rally

“We are downgrading Alibaba to HOLD from BUY, while lifting our price target to $180 (from $145). Our constructive view on the mid- to long-term trajectory of Alibaba’s AI, cloud, and platform investments remains intact. However, we believe much of the upside has already been priced in following the sharp recent rally, leaving shares more vulnerable to near-term downside risk. Strong rally YTD / recent momentum. BABA has staged an exceptional run in 2025, with shares up more than 100% YTD and over 40% in the past month. We attribute this outsized move to renewed investor optimism around its AI/cloud pivot following the recent quarterly results, a series of encouraging corporate announcements, and broader improvements in sentiment toward Chinese technology names. Recent catalysts driving incremental gains. Shares gained more than 8% intraday on the back of multiple positive developments. At its recent tech conference, Alibaba unveiled Qwen3-Max, a large language model with over 1 trillion parameters, positioning it more aggressively in the AI arms race. The company also disclosed plans to boost its AI spending beyond an original 380 billion yuan (~USD 53 b) commitment, signaling a more aggressive stance. A new strategic collaboration with Nvidia — to integrate Nvidia’s AI tools and support robotics development — has also been well received by the market.”