Alibaba Expands Data Centers Across Asia: A New Growth Catalyst?

Key Points

• Alibaba has made a new move to expand its data center presence in the Asian region, signaling new potential upside to be had in the coming months.
• Fundamentals are still strong, and some institutional buyers have stepped in as the market ignores this potential.
• Wall Street analysts call for a near doubling in the stock price, but there could be a lot more upside.

Few investors are willing to put their capital to work outside of the United States stock market; however, in today’s global economy and opportunity-based environment, this could be a massive sunk cost of opportunity that not many can afford to take on in their portfolios. For this reason, diversifying into international growth stories can be a great strategy moving forward.

In China, the world’s second-largest economy carrying one of the fastest growing middle classes, there are plenty of blue-chip stocks in the technology sector that can overlay a promise of aggressive expansion and growth for investors to consider, as long as they are bold enough to look into the nation’s growth factors as well as the specific companies at hand.

Among the group, there is one stock that stands out in terms of upside potential and rapid market share growth, and that name is Alibaba Group NYSE: BABA. This company is mainly known for its e-commerce capabilities across the globe. Whether this is done on purpose or not, its exciting cloud computing and data center business is often kept on the back burner, despite its future potential for outsized growth and wealth-compounding effects on the stock price.

Getting Rich Quietly in Alibaba

This stock might not be as exciting a story as some of the other names in technology have been and continue to be, and some investors prefer it that way. As long as patience prevails and a multi-year time horizon is kept in mind, there will likely be plenty of winners who chose to invest in Alibaba stock early enough.

While Alibaba's e-commerce business continues to grow fast enough to propel the company forward and increase its valuation, other (newer) developments aren't getting the attention they need. Alibaba's cloud computing demand has grown so large that it is now in a position to seize a decade-long opportunity.

Some may compare Alibaba to how Amazon.com Inc. NASDAQ: AMZN operates in the United States, and they would be right to do so, especially in the ways that Amazon Web Services (AWS) monetizes business and user data in order to provide industry-leading solutions across the board.

By opening new data centers across Southeast Asia, in countries like Malaysia and the Philippines, Alibaba is now not only positioned to support the economic and technological growth of some of the world's fastest-growing economies but also to meet the data and development needs of businesses emerging in these nations. Saying that this will be a major growth engine for Alibaba is an understatement, and the gap between today's stock price and tomorrow's valuation offers an opportunity most investors won't want to miss.

Alibaba’s Drivers: Upside Gaps Unfilled

Alibaba stock has now traded in a tight channel for the past couple of years. Ever since the low-interest rate cycle created by the COVID-19 pandemic, this growth story in China has cooled off, and the broader theme has sent Alibaba's stock price down to less than 75% of its 52-week high.

More importantly, today’s price is still under a third of the company’s all-time high of just over $315 per share, making today’s valuation seem less rooted in reality than the numbers suggest. And when it comes to numbers, investors need to keep in mind that Alibaba has been steadily growing its underlying financials despite the stock price remaining relatively unchanged during this period.

However, with this new development in place of expansion, there are some in the market deciding that enough is enough, and have started taking advantage of this discounted opportunity today. As of mid-May 2025, institutional buyers from UBS Asset Management decided to expand their Alibaba stock holdings by as much as 85.6%, an unusual move by these big players.

Following the new allocation, the group now holds up to $1.1 billion worth of Alibaba stock in its balance sheet, a position likely rooted in a multi-year thesis that expects the company’s market share and financial performance to continue delivering on the upside promises it has kept over the years.

More than recent institutional buying, other Wall Street participants have expressed (and kept) their bullish outlooks on Alibaba’s future. Fawne Jiang, an analyst at Loop Capital, set a $176 per share valuation on Alibaba stock as of mid-May 2025 and has not changed it since, typically a sign of high conviction when it comes to the cadence of target adjustments by analysts.

From the current trading price, this view suggests up to a 62% upside for investors to consider, but that’s not the best part of this opportunity. Even though this valuation targets a near doubling in the stock, it is still a fraction of where Alibaba once traded, leaving a significant gap to be filled in the coming years, which will be enjoyed by those patient enough to stick with this growth story.