Alibaba - Sound fundamentals despite global uncertainty

Share price has corrected from recent highs

Alibaba’s share price has been volatile in 2025, initially surging over 70% on optimism around its advancements in artificial intelligence, particularly the launch of its Qwen model. 

However, recent global trade tensions and tariff concerns have pulled the stock back by around 20% from its peak. 

Despite these macro headwinds, Alibaba’s fundamentals remain resilient, and the group continues to execute well across its key businesses.

Domestic focus limits trade war exposure

Alibaba’s operations remain predominantly domestic, with China accounting for 87% of its total revenue and contributing 100% of its profitability. 

International businesses, including Trendyol in Turkey and Lazada in Southeast Asia, are still in their expansion phases and contribute operating losses. 

As a result, Alibaba’s direct exposure to tariffs or disruptions in US-China trade flows is expected to be limited.

Advancing AI despite US chip restrictions

In artificial intelligence, Alibaba continues to make significant strides. 

Despite US export restrictions on high-end semiconductors, Alibaba has developed its Qwen model independently, relying on consumer-grade RTX GPUs rather than advanced Nvidia chips. 

Its pursuit of general artificial intelligence (AGI) remains intact, demonstrating innovation resilience and technological leadership.

ADR delisting risk largely mitigated

While concerns around the potential delisting of Chinese ADRs from US exchanges persist, Alibaba has proactively mitigated this risk. 

The company’s Hong Kong listing, upgraded to a primary listing in 2024, allows its shares to be accessed via the Stock Connect Programme. 

Any delisting would primarily trigger portfolio rebalancing without affecting Alibaba’s operations or growth strategy.

Macroeconomic headwinds remain a drag

China’s economy remains fragile, weighed down by a sluggish property sector recovery and weaker exports, which account for roughly 20% of GDP. 

Slowing export growth continues to exert downward pressure on domestic consumption, presenting ongoing challenges for companies like Alibaba that are closely tied to consumer activity.

Valuation at a discount to peers

Currently, Alibaba trades at a forward price-to-earnings (P/E) ratio of 12x, below most of its global e-commerce and AI peers.

While a full-blown trade war would negatively impact global markets, Alibaba’s core business model and fundamentals remain relatively resilient and less exposed compared to other sectors more directly tied to US-China trade flows. 

Investors can now access Alibaba through Hong Kong Singapore Depository Receipts (SDRs), offering a more convenient way to invest in select Hong Kong-listed companies, including Tencent.

The introduction of Singapore Depository Receipts allows investors to purchase Alibaba shares with a lower minimum investment outlay compared to buying Hong Kong-listed shares directly. 

Additionally, SDR holdings will be custodised within investors’ Central Depository (CDP) accounts, providing seamless integration with their existing Singapore-based portfolios.

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