Alibaba Price Target Slashed to $170 as Heavy AI Spending Drags Profits Down 67%

Alibaba Group Holding Ltd. (NYSE:BABA | BABA Price Prediction) has struggled through a rough stretch. The stock is down nearly 15% over the past month and nearly 19% year-to-date, sitting at $126.41 and well below its five-year high of $238.69.

Most Wall Street analysts hold measured views on the near-term path forward. But Susquehanna analyst Shyam Patil maintains a Positive rating with a $170 price target, implying meaningful upside from current levels. That target sits above the broader Street consensus on a stock that has spent the past year essentially flat, down 0.49% over the trailing twelve months. But can BABA realistically reach $170 by the end of 2026?

Shyam Patil’s $170 BABA Prediction

Patil lowered his target to $170 from $190, acknowledging that Q3 FY2026 revenue and profitability came in below expectations as the company deepens its investment cycle. The cut reflects near-term pain while preserving long-term conviction in Alibaba’s trajectory. Patil’s bull case rests on the premise that Alibaba’s spending in AI infrastructure and quick commerce is building durable competitive advantages that will eventually translate into earnings power well above current depressed levels. With non-GAAP net income down 67% year-over-year to $2.39 billion, the market is pricing in the investment cycle ahead of the eventual recovery.

Key Drivers of BABA Stock Performance

1. Cloud and AI monetization: Alibaba Cloud grew 36% year-over-year with AI-related product revenue delivering triple-digit growth for the tenth consecutive quarter. This is the compounding engine. As AI cloud spending scales globally, Alibaba’s 35.8% share of China’s AI cloud market positions it to capture a structurally growing revenue stream over the next decade.
2. Quick Commerce scaling: Quick Commerce revenue surged 56% year-over-year to $2.98 billion. Heavy upfront investment is compressing margins today, but the segment’s trajectory mirrors early e-commerce growth cycles that rewarded patient, long-term holders.
3. Capital return discipline: Alibaba carries $19.1 billion remaining in share buyback authorization through March 2027. Active repurchases at depressed valuations reduce share count and amplify per-share earnings growth as profitability normalizes — a meaningful tailwind for retirement accounts compounding over time.

What Will It Take for BABA to Reach $170?

At $170 per share against a current market cap of approximately $310 billion, reaching the target requires the market to re-rate the stock as investment spending peaks and profitability recovers. Three conditions matter most: Cloud revenue sustaining its current growth trajectory, sales and marketing expenses — which surged to 25.3% of revenue from 15.2% a year ago — beginning to normalize, and free cash flow recovering from its 71% year-over-year decline to $1.62 billion.

The primary risk is straightforward: management has signaled continued aggressive spending in the near term, with an open-ended timeline for when profitability normalizes. For investors with a multi-year horizon, Patil’s $170 target reflects a credible recovery scenario where Alibaba’s AI and cloud investments pay off — and the current price offers an entry point the market may look back on as an opportunity.