Alibaba Stock Rallies on Strong Q3 Earnings Acceleration

Alibaba stock has surged after reporting a strong fiscal third-quarter performance, with a notable rebound in e-commerce and significant AI growth. Investors are optimistic about the company's transformation and future potential.

Date: 28-02-2025

AI Rating: 7

Earnings Highlights
Alibaba reported an overall revenue increase of 8% to $38.4 billion, with adjusted earnings per American depositary share rising 13% to $2.93. This positive growth in earnings indicates that the company's turnaround efforts are beginning to bear fruit, demonstrating a solid performance amidst previous struggles.

Revenue Growth
The company's e-commerce segment, which remains its largest business, showed solid growth of 5% for the quarter, achieving $18.6 billion. Additionally, the cloud computing segment's revenue grew 13% to $4.3 billion, showcasing diversification and growth in multiple areas of the business.

Profit Margins
Adjusted earnings before interest, taxes, depreciation, and amortization rose 4% to $7.5 billion, indicating that Alibaba is effectively managing its costs and enhancing profitability. The company’s EBITA (earnings before interest, taxes, and amortization) also showed healthy growth, with an increase of 2% to $8.4 billion.

Free Cash Flow (FCF)
The firm reported a free cash flow of $5.3 billion, providing it with ample liquidity for investments and potential growth opportunities. This figure reflects a robust ability to generate cash, an important indicator for sustainability.

Ratings and Outlook
With the positive trends in revenue and profits, coupled with the ambitious plans for AI investments, investors can view Alibaba favorably. The shift of its international commerce segment (AIDC) toward profitability within the next fiscal year could be pivotal in sustaining performance and investor confidence.

Stocks: BABA AAPL