Many large technology firms are increasing artificial intelligence spending and expanding data centers, while investors remain uncertain about the returns, pushing many stocks lower in 2026 as capital expenditure and research and development rise. Alibaba is positioned as a potential buying opportunity with a mix of challenges and growth drivers. Its e-commerce business is mature and slower-growing, facing competition from PDD Holdings and ByteDance’s social commerce, while quick commerce currently weighs on profitability despite 57% year-over-year revenue growth to about $2.9 billion. Alibaba’s AI and cloud segment grew 38% last quarter, including 40% from external customers, with AI revenue showing triple-digit growth for 11 straight quarters. Cash from e-commerce is being directed into AI efforts, and AI integration across Taobao and T-mall is expected to support the core business.
"Many big tech companies are spending heavily on developing artificial intelligence and building out data centers to support the megatrend. Investors, however, remain unsure about most of those spending plans, sending many stocks lower in 2026 as capital expenditure and research and development budgets move higher. That's created plenty of buying opportunities for investors looking to build positions in AI stocks."
"Alibaba is one of the largest e-commerce companies in China, but it's struggling to compete with PDD Holdings and ByteDance's growing social commerce through its Douyin app (China's TikTok). It's also spending heavily on building its quick-commerce business, which aims to deliver items and food within 30 minutes of ordering."
"The e-commerce business is now a slow-growing, mature business. While growth initiatives like quick commerce hold potential to expand the addressable market, they currently remain a drag on profitability. That said, quick-commerce revenue climbed 57% year over year last quarter, reaching about $2.9 billion. Alibaba also sees potential to support its e-commerce business with AI, integrating its Taobao and T-mall properties with its Qwen AI app."
"Alibaba's AI + Cloud business produced revenue growth of 38% last quarter, with 40% growth from external customers. That's been accelerating over the past few quarters, and it should continue to do so over the course of 2026. AI-related revenue, in particular, posted an 11th straight quarter of triple-digit revenue growth. CEO Eddie Wu expects AI revenue to account for half of the segment's total revenue within a yea"
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