Alibaba (BABA), the Chinese e-commerce giant, came through with a strong Q2 Fiscal 2025 earnings report, proving that its core businesses can hold their ground in a crowded market. Revenue grew by 5% to reach RMB 236.5 billion ($33.7 billion), surpassing the consensus estimate of $33.06 billion and signaling steady demand across its various segments.
Alibaba’s EPS Beats Consensus
A highlight of the report was Alibaba’s non-GAAP earnings per share (EPS), which came in at $2.15, beating analysts’ consensus expectation of $2.05. Although this figure marked a slight decline from last year, it reflects Alibaba’s disciplined approach to cost control alongside strategic investments. “We are more confident in our core businesses than ever,” stated Alibaba CEO Eddie Wu, emphasizing the company’s ongoing commitment to long-term growth.
BABA’s E-commerce and Cloud Fuel Revenue
Alibaba’s core commerce business, anchored by Taobao and Tmall, remained the primary revenue driver, benefiting from enhanced user engagement and increased order frequency. The company reported gains in Gross Merchandise Value (GMV) as it rolled out GMV-based service fees, canceled annual Tmall merchant fees, and launched AI-driven marketing tools like Quanzhantui. These initiatives boosted merchant engagement and solidified Alibaba’s market presence.
Meanwhile, the Cloud Intelligence Group posted RMB 29.6 billion ($4.2 billion) in revenue, marking a 7% increase year-over-year. AI-related products saw triple-digit growth, a testament to Alibaba Cloud’s leadership in China’s technology landscape. Wu noted that “AI-related product revenue grew at triple digits year-over-year for the fifth consecutive quarter,” highlighting the company’s ambitions in the AI space. Moreover, Alibaba’s cloud dominance in China has been recognized by industry leaders like Forrester, with the company earning top scores in strategy and execution.
BABA Share Repurchases Add Value for Shareholders
A big move this quarter was Alibaba’s aggressive share repurchase program. The company bought back $4.1 billion in shares, reducing its outstanding shares by 2.1% since June. These buybacks are not just cosmetic; they add value to each remaining share by boosting earnings per share and demonstrating Alibaba’s confidence in its financial health.
Xu described the share repurchase strategy as a way to achieve “earnings accretion to our shareholders,” hinting at continued buybacks as part of Alibaba’s long-term plan. This move reflects the company’s optimism about its own value, and there’s more room for repurchases with $22 billion left in the authorized buyback plan, which extends through 2027.
Is Alibaba a Good Stock to Buy Right Now?
Analysts remain optimistic about BABA stock, with a Strong Buy consensus rating based on 15 Buys and three Holds. Over the past year, BABA has increased by more than 5%, and the average BABA price target of $124.40 implies an upside potential of 37% from current levels. Analysts are likely to reiterate their price targets after these results are released.
