Here's a classic tech pivot story: Alibaba Group Holding Limited (BABA) is betting its future on artificial intelligence. The cost of that bet? More than a third of its workforce.

The Chinese e-commerce juggernaut is slashing costs and reshaping its entire operation, cutting about 34% of its employees in 2025. The company ended the year with 128,197 people on the payroll, down from 194,320 a year earlier. That's not just trimming around the edges—that's a fundamental reshaping of what kind of company Alibaba wants to be.

According to reports, the headcount reduction came after selling offline retail assets and restructuring operations to focus more on AI. These moves arrive as Alibaba deals with some financial headwinds, including a 67% drop in quarterly profit and only modest revenue growth. Part of that weakness comes from heavy spending on promotions to defend its core e-commerce business against competitors. When you're fighting a war on multiple fronts, something's got to give.

The New AI Crown Jewel

So what's all this restructuring for? Meet Qwen3.5-Max-Preview, Alibaba's most advanced AI model to date. The Jack Ma co-founded tech giant unveiled this system as it pushes to compete with global AI leaders. The model reportedly ranked as the top Chinese system on a major benchmarking platform and demonstrated strong performance in areas like mathematics.

Think of it this way: Alibaba isn't just dabbling in AI—it's building an entire ecosystem. The company continues to expand its Qwen model family, launch enterprise-focused tools like the Wukong AI service, and even raise cloud and storage prices to improve monetization. When you're investing billions, you need to start seeing returns.

The $100 Billion Question

Speaking of returns, Alibaba has set an ambitious target: generate over $100 billion annually from cloud and AI within five years. That's not pocket change, even for a company of Alibaba's size. To get there, the company is investing more than $53 billion in AI infrastructure and reorganizing its business to focus on enterprise customers and AI services.

With strong demand for AI products and rising usage across its platforms, Alibaba is working to turn its expanding AI ecosystem into a major source of long-term revenue. It's a classic platform play—build the infrastructure, attract the users, monetize the ecosystem.

Some investors are already seeing the potential. First Eagle views the stock as undervalued based on its AI prospects. The fund believes Alibaba's current valuation largely reflects its e-commerce business, with its AI segment offering additional upside that the market hasn't fully priced in yet. In other words, the market might be valuing yesterday's Alibaba, not tomorrow's.

Technical Reality Check

Now for the less optimistic part: the stock chart. Alibaba is trading 9.5% below its 20-day simple moving average and 19.5% below its 100-day SMA. That keeps the near- and intermediate-term trend pointed down, despite Friday's early bounce attempt.

Shares are down 8.77% over the past 12 months and are positioned closer to their 52-week low ($95.73) than their 52-week high ($192.67). The Relative Strength Index sits at 26.45, which is oversold territory and signals that selling pressure has been extreme in the near term. Meanwhile, the Moving Average Convergence Divergence (MACD) is at -6.5556 and below its signal line at -6.4538, reinforcing that downside momentum remains in control.

The combination of oversold RSI (below 30) and bearish MACD suggests mixed momentum. For traders watching the levels:

• Key Resistance: $139.00
• Key Support: $117.50

What Comes Next?

The next major catalyst for the stock arrives with the estimated May 14, 2026 earnings report. Here's what analysts are expecting:

• EPS Estimate: $1.01 (Down from $1.73 year-over-year)
• Revenue Estimate: $34.84 Billion (Up from $32.58 Billion year-over-year)
• Valuation: P/E of 16.4x (Suggests fair valuation relative to peers)

The analyst consensus remains bullish with a Buy rating and an average price target of $187.69. Recent moves include:

• Jefferies: Buy (Lowers Target to $212.00) (Mar. 19)
• Jefferies: Buy (Lowers Target to $225.00) (Jan. 8)
• Freedom Capital Markets: Downgraded to Hold (Jan. 6)

The Contrarian Profile

Looking at various metrics, Alibaba presents what you might call a contrarian setup. Momentum is weak (score: 14.43), which fits with its position well below key moving averages. Quality screens as neutral (score: 62.5), suggesting fundamentals are steady and the current pressure is more about price trend than balance-sheet stress.

But here's the interesting part: value screens as strong (score: 89.62). Valuation factors look attractive, which can draw dip-buyers when the chart gets stretched to the downside. Growth metrics are middle-of-the-pack (score: 58.71), so the stock may need execution and sentiment improvement to re-rate higher.

The verdict? A value-tilted setup with weak momentum. That combination often points to a contrarian opportunity—potentially attractive on valuation, but still needing technical confirmation (like reclaiming resistance) before the trend picture improves.

ETF Exposure and Price Action

Because of Alibaba's size, it shows up in several ETFs with significant weightings:

• SPDR NYSE Technology ETF (XNTK): 3.53% Weight
• Robo Global Artificial Intelligence ETF (THNQ): 2.57% Weight
• Nomura Focused Emerging Markets Equity ETF (EMEQ): 4.57% Weight

This matters because any significant inflows or outflows from these funds will likely trigger automatic buying or selling of Alibaba stock.

As for recent price action, Alibaba shares were up 0.68% at $125.75 during premarket trading on Friday, according to market data.

So here's the Alibaba story in a nutshell: a massive workforce reduction, a huge bet on AI, ambitious revenue targets, and a stock that looks cheap if you believe in the transformation—but needs to prove it can execute. It's the kind of high-stakes pivot that either creates the next generation of a tech giant or becomes a case study in overreach. Only time will tell which path Alibaba is on.