Alibaba’s Critical Juncture: AI Ambitions Face Profitability Test

Chinese e-commerce titan Alibaba Group stands at a pivotal moment as its traditional retail operations face headwinds while substantial artificial intelligence investments seek to drive future expansion. The central question confronting investors is whether the company's technological bets can sufficiently counterbalance disappointing earnings performance in its core divisions.

From a technical analysis perspective, Alibaba shares are approaching a decisive level. The stock recently breached an upward trend line that had provided support since August, signaling potential weakness. Chart analysts now identify the October low of $157.25 as a critical support threshold. A breach below this level could trigger additional downward pressure. Conversely, regaining the late-October high of $182.50 would signal a potential trend reversal and restore technical confidence in the equity.

Impending Earnings Report Carries Weight

Market participants are closely monitoring the scheduled November 13 release of quarterly results, with forecasts suggesting concerning profitability metrics. Pretax profit is projected to contract by a substantial 64.9 percent, while revenue shows only marginal growth of 2.6 percent. This pronounced earnings compression would similarly depress earnings per share by 63.6 percent—a concerning development for a technology enterprise of Alibaba's scale.

Should investors sell immediately? Or is it worth buying Alibaba?

Cloud and AI Divisions Provide Counterbalance

Amid the challenging outlook, Alibaba's technology segments offer encouraging signals. The Cloud Intelligence unit has demonstrated robust expansion, posting 26 percent growth largely fueled by artificial intelligence products achieving triple-digit percentage increases. The company's proprietary AI model, Qwen3-Max, has additionally proven competitive against rival offerings, underscoring Alibaba's continued technological relevance. These advancements assume greater importance as domestic e-commerce operations contend with subdued consumer sentiment and intensifying competitive pressures.

The fundamental challenge remains whether Alibaba's artificial intelligence initiatives can generate sufficient momentum to offset core business weaknesses over the long term, or whether the technology giant requires more substantial strategic realignment.