How Alibaba Stock Could Defy Trade Tariffs and Surge Higher

Key Points

• Investors are concerned about whether Alibaba stock can continue rising amid recent trade tariffs on Chinese goods exports.
• Fundamentals suggest that the company should be okay with these events, and two major investors still agree with that fact.
• Wall Street analysts have recently expressed their optimism by placing a double-digit upside potential for Alibaba as well.

Investors have had to deal with the recent stock market volatility that has come along with President Trump's latest round of tariffs. While these are leaving a lot of uncertainty across the economy and other companies that have shown weaker stances in their most recent quarterly earnings, one question is still left unanswered.

That is, whether these tariffs will affect overseas stocks similarly to how they have affected United States stocks so far. There is now a particular focus on Chinese stocks and Asia’s powerhouse economy. The reality is that these tariffs will most likely affect China’s trade volume with the United States; however, not all companies will be terribly affected by this issue.

When it comes to the country’s technology sector, the concern is more about whether data from American citizens is being accessed by these Chinese firms, as seen by the recent debacles in the TikTok platform. But here’s where investors can feel safe: Alibaba Group NYSE: BABA not only offers a great risk-to-reward ratio as a safety, but also its broadly international consumer business and cloud computing branches allow it to mitigate the impacts these tariffs could have.

Alibaba Stock’s Risk-to-Reward Ratio

Even though the stock has recovered to as much as 85% of its 52-week high, Alibaba stock is still behind its American counterparts. Investors can see this through shares of Alphabet Inc. NASDAQ: GOOGL, Meta Platforms Inc. NASDAQ: META, and even Amazon.com Inc. NASDAQ: AMZN.

After a pretty steep earnings decline in some of these American technology stocks, they are still trading within 10% of their 52-week highs, not to mention close to their all-time highs. Alibaba’s all-time high price is just over $300 a share, so comparing these two sets of companies can lead investors to one conclusion.

That conclusion is that Alibaba still holds one of the most favorable risk-to-reward ratios in the global technology market, one that has attracted some of Wall Street’s best investors in recent quarters. Right now, both Michael Burry and David Tepper hold Alibaba as their largest position in their respective portfolios, and there’s a reason for that.

Relative Immunity to Tariffs

Alibaba does a lot of business in the United States, where customers often buy from AliExpress due to the relatively cheaper offers and bulk business model. However, the company is also strongly positioned across Asia and the Middle East, even in Europe and Latin America.

That means that although tariffs might affect consumer buying trends from Alibaba, overall, it will be a small dent in the company’s bottom line and volumes. More than that, Alibaba is much more than a retail and wholesale company; it has its hands on the growth of cloud computing in these nations as well.

With the recent DeepSeek and NVIDIA Co. NASDAQ: NVDA debacle, it’s not too far-fetched for investors to imagine a world where Alibaba provides DeepSeek and other artificial intelligence platforms with the infrastructure to develop and train these models.

Across Asia and other locations, Alibaba has also set up shop via data centers. If Amazon’s success can be attributed to having access to consumer data, allowing for trend and taste discovery, then Alibaba can take that model to a much bigger scale. And yet, current valuations reflect none of these bullish factors.

Unbelievable Discounts for Alibaba Stock

With this in mind, investors can look to Alibaba’s forward price-to-earnings (P/E) ratio of 9.8x today as a steep discount to its American peers, who are valued at a 23.4x P/E average. Not only were Burry and Tepper willing to buy into this discount, but other market players also shared their optimism.

Analysts from Citigroup, for example, decided to reiterate their Buy rating on Alibaba stock as of January 2025, this time placing a $138 per share valuation on it. From today’s low level, this new valuation would call for up to 37.5% upside, giving investors one of the best plays to navigate this new tariff volatility.

Ultimately, the company’s management also understands just how cheap this business is today. Through a $25 billion stock buyback program, the company insiders are sending a message to the entire market. Buying back what would be worth 11% of the company’s market capitalization is a bold statement to indicate how cheap Alibaba is today.

All told, tariffs don’t look like they will impact much of Alibaba’s business, which is heavily discounted in valuation multiples compared to how much it can grow in the coming years.