Alibaba stock price has remained in a bear market after plunging by ~20% from its highest point in 2025. It dropped to a low of $146 in December and then rebounded to $152 in the pre-market. This article conducts a technical analysis pointing to a rebound.
Alibaba stock price technical analysis
The daily timeframe chart shows that the BABA stock price has retreated in the past few months, moving from a high of $192 to the current $152.
It has moved above the 200-day Exponential Moving Average (EMA), which is a bullish sign in technical analysis.
Most importantly, the stock has formed a giant falling wedge pattern, which is made up of two descending and converging trendlines.
The two lines are now nearing their confluence level, which is a sign that a bullish breakout is about to happen.
At the same time, the wedge pattern is forming after the stock pumped from a low of $103 in July to a high of $192 in October. That is a sign that it is forming a bullish pennant pattern, which is made up of a vertical line and a symmetrical triangle.
Therefore, the stock will likely bounce back in true coming weeks or months, potentially to the psychological level at $192, which is ~25% above the current level. A move above that price will point to more gains, potentially to the psychological level at $200
On the other hand, a drop below the 200-day EMA level at $140 will invalidate the bullish Alibaba forecast and point to more downside in the near term.
Alibaba stock chart | Source: TradingView
BABA stock has numerous catalysts
Alibaba stock price rally will be driven by the ongoing boom in the artificial intelligence (AI) industry, which is boosting its cloud business.
The most recent results showed that its Cloud Intelligence Group’s revenue rose by 34% in the third quarter to $5.59 billion. This growth also happened in terms of its profitability, whose EBITDA jumped by 35% to $506 million.
Alibaba has continued to invest in the AI industry, where it has launched several models, including Qwen and Kimi, which are good alternatives to OpenAI’s ChatGPT.
The company’s other businesses are also doing relatively well, with the International Digital Commerce Group growing by 10% in the third quarter to $3.93 billion. Its e-commerce revenue also rose by 9%.
Wall Street analysts are optimistic that the company’s business will continue doing well in the coming years. The average estimate is that its 2025 revenue will be 1.04 trillion yen, up by 4.7% from 2024. This revenue is expected to then hit 1.15 trillion yen this year, with its earnings-per-share (EPS) rising to 65.64 yen from 46.3 yen.
Alibaba is also a relatively cheaper company compared to its peers. It has a forward PE ratio of 20, much lower than Amazon’s 32 and the S&P 500 Index average of 23.
Therefore, a combination of strong cloud business, strong earnings, its cheap valuation, and technicals points to more upside in the near term.
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