• What’s the impact of tariffs and hopes for lowering them?

• Are Chinese consumers spending more?

• How is AI going?

Alibaba, the world’s largest online and mobile commerce company, reports its fiscal Q4 2025 earnings on Thursday. Set against progress on trade talks between the US and China, these earnings look set to garner a fair amount of investor attention. There has also been a lot of hype around China’s AI story and BABA is at the heart of this – can it monetize this adequately in the near-term? Thirdly, Beijing has been injecting stimulus to boost domestic demand – has Alibaba been a beneficiary?

AI

The core ecommerce businesses remain the main drivers of revenue, however its AI segment is proving increasingly valuable. BABA has been one of several Chinese tech companies to see strong tailwinds from a relatively new interest in the China AI story off the back of the DeepSeek shock earlier this year. The launch of DeepSeek’s cheaper chatbot has raised expectations that AI adoption will accelerate and boost Alibaba Cloud’s services.

Alibaba recently released its latest large language model, Qwen3 and has made significant progress in expanding its AI and cloud businesses in recent quarters, with growth in the Cloud Intelligence Group posting year-on-year sales growth of 13% in Q3. This is expected to see acceleration to +16% growth in Q4.

Its Qwen3 family of large language models, which boasts a hybrid system of thinking and non-thinking, has made big progress and in some tests has surpassed models from OpenAI and DeepSeek. The “thinking” mode is designed for complex tasks like logic or maths, while the “non-thinking” mode enables fast, general-purpose responses – the idea being that this optimises performance.

Consumer

Its core online shopping sites - Taobao and Tmall Group, posted an annual 5% rise in revenues in Q3. These account for approximately half of revenues – but this share ought to diminish as AI business increases. Its International Digital Commerce Group — which oversees ecommerce businesses such as Lazada and AliExpress — posted revenue growth of 32% year-on-year in the third quarter, and represents about 15% of group revenues.

Ecommerce competition remains fierce in China. Alibaba said last week it was deepening its partnership with RedNote, wich enables sellers to embed product links from Alibaba's Taobao and Tmall stores into content posts on RedNote in China, known locally as Xiaohongshu.

Meanwhile, BABA has enjoyed some tailwinds from a stronger Chinese consumer as government efforts to boost spending start to yield results. For instance, China’s retail sales grew 5.9% in March as stimulus measures gained traction.

Overall, Wall Street expects revenue growth from BABA of 6.4%. Analysts expect Q4 '25 revenues of $33.17bn with non-GAAP EPS of $1.77.

What’s the consensus on BABA?

The stock trades on a forward PE multiple of above 12, having been down below 9 as recently as December. Its 5-year average is 15x. The stock has had a very strong year, rallying about 50% YTD, although the stock has yet to recapture the post-DeepSeek high above $148.