Alibaba stock: rising cloud revenue overshadowed by margin compression prompts decline

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Alibaba drops 3.45% to HK$145.60 today

Highlights

Alibaba reported a 34% year-over-year increase in cloud revenue and a 60% rise in quick commerce revenue, signaling robust core business growth.
The company is committing RMB 380 billion to artificial intelligence and data center infrastructure investments, supported by over $80 billion in cash reserves.
Increased investments and costs caused EBITA margin compression, while Alibaba faces regulatory pressures and an ongoing legal investigation in China.

Margin compression and regulatory risks despite surging revenue

Alibaba reported a 34% year-over-year increase in cloud revenue and a 60% rise in quick commerce revenue, reflecting strong momentum in its core business lines. The company is dedicating RMB 380 billion to investments in artificial intelligence and data center infrastructure, backed by over $80 billion in cash. Investments and higher costs have resulted in EBITA margin compression, while regulatory pressures and an ongoing legal investigation in China remain headwinds.

Bearish momentum diverges from mixed oscillator signals

The current price of HK$145.60 is trading below the MA-20 at HK$148.35 and well under the MA-50 at HK$154.86, but remains above the long-term MA-200 at HK$134.05. This configuration suggests short- and medium-term pressure from sellers, while longer-term structure is still supported; the nearest dynamic resistance is the Ichimoku Kijun at HK$150.85, and support lies near the MA-200 at HK$134.05.

Momentum indicators are mixed: the daily MACD signals strong bearish momentum while the ADX reads neutral, and the market shows a loss of 3.45% today with a clear downward gap from the previous close. The Stochastic RSI and Bull/Bear Power both indicate overbought territory, while the RSI and CCI are in buying territory but do not show excess, highlighting a divergence between oscillators and momentum. The price is currently mid-range after high intraday volatility, and initial seller pressure dominated after the open; intraday moves contradict the neutral-to-positive tilt of some oscillators.

Sideways range expected as strong indicators favor upside

For the coming week, a typical volatility band relative to current levels is expected between HK$142.00 and HK$148.00. There is a very high probability (more than 80%) of a price increase, supported by strong weekly signals from the RSI, ADX, MACD, and moving averages; a price decline is less likely. The baseline scenario is for the price to remain in a sideways range between HK$142.00 and HK$148.00, with a bullish case for a breakout above HK$150.85 resistance and a bearish scenario if support at HK$142.00 fails, targeting HK$134.05.

Viktoras Karapetjanc, head of research at Traders Union, sees Alibaba showing resilience despite near-term selling pressure. He highlights robust growth in cloud and commerce segments and notes the company’s major investments in AI and infrastructure as long-term positives. The analyst believes regulatory headwinds and margin challenges are important, yet structural support and strong fundamentals persist. Short-term price action may remain choppy, but medium-term prospects are constructive. "I expect that Alibaba’s momentum and commitment to innovation will support a recovery above HK$148.00 if current support levels hold in the coming week."

Last time, analysts noted that Alibaba was trading just below its short-term moving average, with medium- and long-term trends remaining constructive despite mild selling pressure and mixed momentum signals. While technical indicators highlight indecision and some overbought conditions, key support near the MA-50 suggests mild upside remains intact, provided the price holds above this level.

Source of Data: 9988 Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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