With the U.S. and China back in a full-blown trade war, there’s growing uncertainty about how this could ripple through global markets—and one of the companies caught in the crosshairs is Alibaba. We’re seeing tariffs ramp back up on both sides, and this is raising real concerns about the future of cross-border commerce, supply chains, and consumer behavior.
So in today’s video, we’re diving deep into Alibaba—what’s happening with the business, how reliant they are on international trade, how much of an impact these new tariffs could really have, and whether the current selloff in the stock is justified—or a potential opportunity. We’ll break down the company’s revenue mix, analyze its valuation, revisit what happened the last time the U.S. and China were at odds, and wrap up by checking in on the YouTube portfolio. All I ask in return is that you go down below and hit the like button—it really helps the channel grow, and I truly appreciate the support. Also, if you enjoy this kind of in-depth stock analysis, make sure to subscribe for more videos just like this one.
Let’s jump into it.
The Market Reaction and the Tariff Shock
Alibaba’s stock had actually been performing relatively well earlier in the year. While the broader market began pulling back in mid-February and has since dropped around 13%, Alibaba managed to hold up nicely throughout February and March. That is, until the last couple of weeks—when everything changed.
As of now, Alibaba is down about 27% from its highs in March, and a large part of that drop has to do with recent developments in the trade war. The U.S. government announced that it’s pausing tariffs for a number of trade partners—but not for China. Instead, tariffs on Chinese goods have been ratcheted up to 145%, while China has responded with a 125% tariff on U.S. imports.
This creates a scenario where trade between the world’s two largest economies becomes, quite frankly, economically unfeasible.
A U.S. government economist went on record saying that a 145% tariff would effectively shut down most trade between the U.S. and China, which is exactly what we’re starting to see. The CEO of Sea Intelligence, a maritime data firm, reported that Chinese furniture manufacturers have seen U.S. orders come to a complete stop. And the same story is playing out in other sectors—apparel, footwear, toys, sporting goods—it’s all drying up.
And when I read that, my mind immediately went to companies like Nike, which still has a decent chunk of its supply chain tied up in China. Their stock has fallen over 33% in just a few weeks. But today we’re not breaking down Nike—we’re focusing on Alibaba.
Where Does Alibaba Make Its Money?
To understand how these tariffs might impact Alibaba, we first need to break down where their money is coming from.
Alibaba’s largest business segment is domestic e-commerce, namely through Taobao and Tmall. This is their core online marketplace business. In the most recent quarter, this segment brought in $18.6 billion, which was up only 5% year-over-year. That sluggish growth isn’t due to global trade—it’s more a reflection of ongoing economic weakness within China itself.
Next up is International Digital Commerce, which generated $5.1 billion in the same quarter and is growing at a very solid pace—up 32% year-over-year. But here’s the key: most of that growth is coming from Southeast Asia and other emerging markets, not from the U.S. So even though this is “international,” it’s not as exposed to the trade war as you might think.
Then we’ve got Alibaba Cloud, which is their AI and cloud computing arm—basically their version of AWS. Even if some users in the U.S. were using Alibaba Cloud (which is already limited), tariffs wouldn’t really apply, since this is a digital service, not a tangible good being shipped overseas.
They also have a logistics business, but again, most of that is focused on handling deliveries within China and Southeast Asia. So while it’s technically possible tariffs could have a knock-on effect, the direct exposure here is fairly limited.
The Indirect Risk: A Domestic Ripple Effect
Now, while Alibaba’s direct exposure to the U.S. market is minimal, that doesn’t mean it’s completely insulated. There’s a secondary effect we need to think about.
If U.S. companies—especially those in apparel, tech, or manufacturing—start pulling out of China or cutting back on orders, that could lead to layoffs across Chinese factories. That in turn could lower disposable income in China, reducing consumer demand. And that does impact Alibaba, because less disposable income means fewer people shopping online, ordering food, buying electronics, etc.
So even if Alibaba isn’t selling directly into the U.S. in a big way, a broader economic slowdown in China—triggered by falling exports—could still hurt them.
A Silver Lining: The Government Pivot
But here’s the interesting part: this new trade war might actually work in Alibaba’s favor long-term.
Over the past few years, the Chinese government has cracked down heavily on tech companies like Alibaba. But in recent months, we’ve seen a shift. With exports under pressure and the economy still shaky, Beijing may increasingly rely on big tech to drive domestic growth and help stabilize the economy.
If the government starts cooperating more with companies like Alibaba—rather than trying to control or punish them—it could create tailwinds for innovation, investment, and even policy support.
Flatlined Revenue, But Improving Fundamentals
Now let’s zoom out and look at the fundamentals.
Alibaba’s revenue has been flat for a while now. Back in March 2022, their trailing 12-month revenue was $134.5 billion. As of the latest quarter, it’s $136.1 billion—barely any growth over three years.
Same goes for earnings. Their trailing 12-month EPS is $6.96, and you actually have to go back to 2020 to find comparable levels. Over the last couple of years, it’s bounced around in a range of about $4 to $7 per share.
But here’s what’s wild: the last time the U.S. and China were in a trade war—in 2018—Alibaba’s EPS was just $3.50, and revenue was about $40 billion. So today, they’ve tripled revenue and nearly doubled EPS—yet the stock is trading below where it was in late 2018.
Back then, in December 2018, Alibaba hit a low of $132 per share, and over the next year it actually rallied over 60%. And that was during a time of slower growth and smaller earnings.
The Buyback Factor
One last point to consider is share count. In 2018, Alibaba had 2.6 billion shares outstanding. Today, that number is down to 2.4 billion. So they’ve been buying back stock, which improves the value of each remaining share and shows management still has conviction in the business.
If earnings begin to grow again and the macro picture improves—even slightly—that lower share count could help push the stock higher faster than before.
Alibaba has consistently reduced its share count by over 5% year-over-year, which is a big deal for long-term shareholders. Fewer shares outstanding means the same pool of earnings gets distributed over a smaller base, effectively boosting earnings per share (EPS). That’s a built-in tailwind for EPS growth—even if revenue remains flat.
Now, looking at analyst estimates for 2025, EPS is only expected to grow by 5%, which in my opinion is surprisingly conservative. The average EPS estimate sits at $8.95, with a low-end forecast of $7.97 and a high-end estimate of $9.31.
But that changes pretty dramatically heading into 2026. Analysts are projecting EPS to grow by 13.7%, reaching $10.18 per share. And that’s without assuming massive expansion in any of their segments—it’s based on continued operational efficiency and a rebound in the broader Chinese economy.
The reason I personally own Alibaba stock is because, in my view, the valuation is just flat-out ridiculous right now.
According to Yahoo Finance, Alibaba is currently trading at a forward P/E ratio of just 10.49. But let’s plug in those 2025 EPS numbers again:
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At the low end ($7.97), the forward P/E is around 13.4
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At the average estimate ($8.95), the P/E is 11.5
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And at the high end ($9.31), it’s around 10.7
To me, those are absurdly low multiples for a company of this size and quality.
I believe the absolute floor for Alibaba’s valuation should be 15x earnings. Even using the lowest EPS forecast, that would put the stock price at around $120 per share.
But realistically, Alibaba should trade in line with broader indices like the S&P 500 or even the Nasdaq. That would imply a P/E ratio between 20 and 25, which isn’t unreasonable at all—especially considering their growth potential in cloud computing and AI.
At those multiples, using 2025 EPS estimates, we get:
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On the low end: $7.97 × 20 = $159, and × 25 = $199
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On the high end: $9.31 × 20 = $186, and × 25 = $232
And remember, that’s with only 5% EPS growth. If Alibaba does hit that $10.18 EPS in 2026, and the market finally assigns a 25x multiple, we’re looking at a stock price of around $254 per share.
Now, I know what some people are thinking: "How does Alibaba get from $107 today to over $250?"
Well, don’t forget—Alibaba was trading above $300 per share in 2020. It’s already been there before. The fundamentals are stronger today, the company is leaner, and they’re positioned to benefit from China’s digital infrastructure push, especially in cloud and AI. If anything, it’s U.S. investors' sentiment that’s holding the stock down—not the actual business.
So yes, I’m very bullish on Alibaba over the long term, and that’s why I continue to hold it.
Final Thoughts
So here’s the big picture: Alibaba is not as directly exposed to U.S. tariffs as a company like Nike or Apple. But it could feel secondhand pressure if China’s economy weakens further due to collapsing exports. However, this environment could also encourage more government support and policy shifts in favor of large tech platforms like Alibaba.
The fundamentals are arguably stronger than they were in 2018, the valuation is lower, and the company is more efficient with fewer shares outstanding. But the sentiment is negative—and that creates volatility. Whether that turns into opportunity or risk depends on your time horizon and conviction in China’s macro recovery.
Let me know your thoughts in the comments: are you buying Alibaba here, staying on the sidelines, or looking elsewhere?
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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