To The Moon

$Alibaba(BABA)$ is scheduled to report its fiscal Q1 2026 results on Friday, August 29, 2025, before the market opens.

Revenue: Analysts forecast revenue of approximately $34.26 billion (or CNY 253.81 billion), representing a modest year-over-year increase.

Earnings Per Share (EPS): The consensus EPS is estimated at $2.13 per share, which would be a decline from the prior-year quarter.

Summary of Alibaba's Fiscal Q4 2025 Earnings

Alibaba (BABA) reported its fiscal Q4 2025 results on May 15, 2025, which were generally viewed as mixed. While the company's profitability exceeded expectations, its revenue came in slightly below the consensus forecast. The market's initial reaction was cautious, as the results and forward guidance highlighted both the company's strengths and the ongoing challenges it faces.

Key Financial Highlights:

Revenue: Alibaba reported consolidated revenue of RMB 236.45 billion (approximately $32.58 billion), a 7% year-over-year increase. While this was a solid growth rate, it fell short of the analyst consensus.

Earnings Per Share (EPS): The company delivered an adjusted non-GAAP diluted EPS of RMB 12.52 ($1.73), which was a 23% increase year-over-year and a significant beat on analyst estimates. This was driven by a focus on cost optimization and improved operating efficiency.

Profitability: Adjusted EBITA saw a robust 36% year-over-year increase, signaling that the company's internal restructuring and cost-control measures are yielding positive results. Net income also saw a substantial increase, though this was partly due to one-time gains from equity investments.

Performance by Business Segment:

Core Commerce (Taobao and Tmall): This segment showed resilience, with customer management revenue growing by 12%. The company benefited from an improved "take rate" (the percentage of sales Alibaba takes from merchants) due to new service fees and its AI-powered marketing tool, Quanzhantui.

International Digital Commerce: This was a standout segment, growing by 22% year-over-year. Platforms like AliExpress and Trendyol were key drivers, and the segment's net loss narrowed, signaling progress towards profitability.

Cloud Intelligence Group: Alibaba's cloud business continued its strong momentum, with revenue growing by 18% year-over-year. Notably, AI-related product revenue maintained a triple-digit growth rate for the seventh consecutive quarter, highlighting its position in the AI infrastructure space.

Lessons Learned from Guidance:

Following the Q4 2025 report, Alibaba's management provided a cautious outlook for the fiscal year 2026. The guidance and subsequent commentary from the earnings call provided several key takeaways for investors:

AI is the Top Strategic Priority: The most significant lesson is that Alibaba is fully committed to an "AI-driven" and "user-first" strategy. CEO Eddie Wu explicitly stated that the company is "seizing the historic opportunity presented by AI." This means they are continuing to invest heavily in foundational AI research (like their Qwen models), cloud infrastructure, and integrating AI into all their business segments, from e-commerce to logistics. This implies that while these investments are a long-term positive, they may continue to weigh on short-term margins.

Focus on Quality over Quantity in E-commerce: In the face of intense competition from rivals like PDD Holdings, the guidance emphasized a focus on improving the quality of the user and merchant experience on Taobao and Tmall, rather than chasing growth at all costs. This includes investing in better services, promotions, and strengthening the 88VIP membership program. The goal is to drive sustainable, high-quality growth and increase the "take rate" to improve profitability.

Profitability in International Commerce is Key: While international commerce is a fast-growing segment, management's guidance indicated a clear focus on achieving profitability. The narrowing of losses and the improvement in unit economics for its cross-border businesses show that the company is prioritizing efficient growth and a path to self-sustainability for its overseas operations.

Macroeconomic Headwinds Persist: The company's cautious outlook implicitly acknowledges the ongoing macroeconomic challenges in China, including a tepid economic recovery and intense domestic competition. This suggests that investors should not expect a sudden, dramatic re-acceleration of growth in the core domestic market. Instead, the company is looking for incremental, quality-driven gains while leaning on its other growth pillars.

In summary, the Q4 2025 earnings and guidance painted a picture of a company in a deliberate transition. The lesson for investors is that Alibaba is no longer chasing the high-growth, market-share-at-all-costs strategy of the past. Instead, it is executing a more disciplined, profitability-focused plan centered on AI and a more efficient, high-quality e-commerce experience. This strategic pivot may result in slower top-line growth in the near term but is aimed at building a more sustainable and valuable business for the long run.

Key Metrics and Factors for Investors to Watch

Investors and analysts are not just focused on the headline numbers. They will be looking for insights into the company's performance across its various business segments, especially given the current economic climate in China and intensifying competition.

Core Commerce (Taobao and Tmall Group):

Revenue and GMV (Gross Merchandise Volume): This remains the company's largest revenue driver. Analysts will be closely monitoring the growth rate of both revenue and GMV to assess the impact of competition from rivals like PDD Holdings (Pinduoduo) and JD.com. PDD's focus on a value-for-money strategy has put pressure on Alibaba's market share and margins.

Profitability: With increased spending on user experience, merchant services, and promotions to counter competition, investors will be looking at how well the company is managing its margins within this key segment.

Cloud Computing (Alibaba Cloud):

Revenue Growth: Alibaba Cloud has been a key growth engine, driven by demand for AI infrastructure and enterprise solutions. The growth rate of this segment is a critical indicator of the company's diversification efforts and its position in the AI race. Analysts will be keen to see if it can maintain or accelerate its recent growth trajectory.

Profitability: While revenue growth is important, its path to sustained profitability is also a key concern.

International Digital Commerce:

Revenue and Order Growth: Platforms like AliExpress, Lazada, and Trendyol are central to Alibaba's international expansion. Investors will be watching for robust revenue and order growth, which would indicate successful execution of its global strategy and a potential offset to domestic market challenges.

Profitability and Cost Management:

Overall Operating Margin: Beyond segment-specific profitability, the company's overall operating margin will be a critical metric. Alibaba has been investing heavily in its various businesses, and the earnings report will show whether these investments are beginning to pay off or if they are further pressuring margins.

Share Buyback Program: The company's share repurchase activities are also a metric to watch. Management's decision to continue buybacks can signal confidence, but some analysts see the recent buybacks as a response to structural business challenges rather than a sign of robust growth.

Forward-Looking Guidance:

Outlook for Q2 and Full-Year 2026: Any commentary from management on their outlook for the next quarter and the remainder of the fiscal year will be highly impactful. The guidance will provide a better understanding of how the company expects to navigate the challenging macroeconomic environment in China and the competitive landscape.

Alibaba (BABA) Price Target

Based on 37 analysts from Tiger Brokers offering 12 month price targets for Alibaba in the last 3 months. The average price target is $151.16 with a high forecast of $176.00 and a low forecast of $112.00. The average price target represents a 23.67% change from the last price of $122.23.

Short-Term Trading Opportunities Post-Earnings

Trading BABA around its earnings report is inherently risky due to the high volatility. However, the report can create opportunities for short-term traders, particularly those who use options.

Volatility and Price Action: Historically, BABA's stock has been prone to significant price swings after earnings reports. An earnings surprise (either a beat or a miss) can lead to a sharp and immediate move. The implied volatility, which is often elevated before earnings, suggests that options traders are anticipating a large price movement.

BABA implied volatility (IV) is 44.8, which is in the 65% percentile rank. This means that 65% of the time the IV was lower in the last year than the current level. The current IV (44.8) is 5.6% above its 20 day moving average (42.5) indicating implied volatility is trending higher.

Potential Scenarios:

Positive Surprise: A better-than-expected report, especially one that shows a strong performance in its core e-commerce or cloud segments, could lead to a significant price rally. Traders might look for a "short squeeze" scenario if a large number of bearish bets are in place.

Negative Surprise: If the company misses on key metrics, particularly revenue or guidance, or if profitability is worse than expected, the stock could face downward pressure. This would reinforce existing investor concerns about competition and China's economy.

Trading Strategies:

Options Strategies: Due to the high volatility, short-term traders often use options strategies to capitalize on the expected move. This could include buying straddles or strangles (betting on a large move in either direction) or using credit spreads to generate income if they believe the stock will not move as much as implied by the options market.

Strategy Blueprint: Bull Put Spread on BABA (Sep 26, 2025)

This is a defined-risk, bullish income strategy. You sell a higher strike put and buy a lower strike put, both expiring on 26 Sep 2025.

Option Setup (based on recent pricing near $122.23):

• Sell: 115 Put @ ~$2.97

• Buy: 105 Put @ ~$0.75

• Net Credit: ~$2.22

• Max Profit: $222 per spread

• Max Loss: $778

• Breakeven: $112.78

• ROI: ~28% if BABA closes above $115

This setup assumes BABA holds above the $115 support zone, which aligns with recent technical strength and your preference for asymmetric convexity.

Technical & Macro Overlay

Technical Signals

• Trend: BABA is in a medium-term uptrend, supported by rising 50DMA and 200DMA convergence

• Support Zone: $114–$116 (ideal short strike zone)

• Momentum: RSI ~60, MACD bullish crossover, ADX > 25 confirms trend strength

• Volatility: Elevated IV supports premium capture

Macro Context

• China’s fiscal impulse and tech sector stabilization are tailwinds

• USD/CNY and regulatory tone remain key risk overlays

• Sector rotation into consumer cyclicals and tech could reinforce BABA’s bid

Scenario Modeling

Tactical Enhancements

• Delta Hedge: Add short-term call if BABA breaks above $125 to capture upside convexity

• Roll Strategy: If BABA dips near $110 early, roll down strikes to reduce delta exposure

• Vol Overlay: Monitor IV crush post-earnings or macro events to opportunistically close early

Caution: Given the mixed and complex economic signals in China, and BABA's internal restructuring, a simple "beat/miss" analysis might not be enough. The market's reaction could be tied to specific commentary from management regarding the future outlook, which makes predicting the direction particularly challenging.

Summary

Alibaba is scheduled to report its fiscal Q1 2026 earnings on August 29, 2025. Analysts expect modest revenue growth of about 2% and a decline in earnings per share, reflecting ongoing competitive pressures and a challenging economic environment in China.

Key metrics to watch include the performance of its core e-commerce platforms (Taobao and Tmall) against competitors like $PDD Holdings Inc(PDD)$, the revenue growth and profitability of its Cloud business (Alibaba Cloud), and the progress of its international digital commerce segment.

Short-term trading opportunities exist due to potential post-earnings volatility. A better-than-expected report, especially on profitability or guidance, could trigger a rally. Conversely, a disappointing report could lead to a sell-off. Options traders may use strategies to capitalize on an expected price swing, though the high implied volatility makes this risky. The overall sentiment remains cautious due to macroeconomic headwinds and intense competition.

Appreciate if you could share your thoughts in the comment section whether you think BABA could show strong performance in its core e-commerce and cloud segments.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.