BABA-3 Key Reasons to Buy Alibaba Stock Beyond its 25.9% Year-to-Date Surge

Core Viewpoint - Alibaba Group (BABA) has shown strong stock performance with a year-to-date gain of 25.9%, significantly outperforming the Zacks Internet-Commerce industry, the Zacks Retail-Wholesale sector, and the S&P 500 [1][2] Group 1: Business Performance and Growth Catalysts - Alibaba's December quarter results revealed revenues of $38.38 billion, reflecting an 8% year-over-year increase, with customer management revenues for Taobao and Tmall Group growing by 9% year-over-year [5] - The Zacks Consensus Estimate for fiscal 2025 revenues is projected at$ 137.03 billion, indicating a 5.01% year-over-year growth, with earnings estimated at $8.92 per share, showing a 1.4% upward revision over the past 30 days [6] - AliExpress introduced a new self-serve option, AliExpressLocal Marketplace, which has led to a 27% year-on-year increase in orders from U.S. SME buyers during its March Expo event [7] - Fliggy, Alibaba's travel subsidiary, launched AskMe, an AI-powered travel assistant, which is expected to capture a larger market share in China's travel sector, with "Buy Now, Plan Later" bookings increasing over 20% in 2024 [9] Group 2: AI Strategy and Innovations - Alibaba's Qwen AI model family has gained significant traction, with over 90,000 derivative models developed globally, and more than 290,000 companies accessing Qwen APIs through Alibaba Cloud [10] - AI-related product revenues have experienced triple-digit growth for six consecutive quarters, prompting Alibaba to commit to its largest long-term investment in cloud and AI infrastructure in the next three years [11] - The AI-driven B2B search engine, Accio, reached one million users within five months of launch, introducing features that automate market analysis and enhance global sourcing [12] - Ant Group has reduced AI training costs by 20% through a unique approach that combines Chinese and U.S.-made semiconductors [13] Group 3: Financial Position and Shareholder Returns - Alibaba maintains a robust net cash position of$ 51.9 billion, allowing for strategic investments and significant shareholder returns [14] - The company has repurchased $1.3 billion in shares in the December quarter and approximately$ 10 billion in the first half of the fiscal year, achieving a 5% net reduction in share count over nine months [15] - Alibaba has streamlined operations by selling non-core assets for approximately $2.6 billion, focusing on higher-growth, higher-margin businesses [16] Group 4: Valuation Metrics - Alibaba is currently trading at a forward 12-month Price/Earnings ratio of 9.8X, significantly lower than the industry average of 19.17X, indicating that the stock is undervalued compared to its peers [17]