China Moves to Support Alibaba During Intense Price Competition. Is Now the Right Time to Invest in BABA Shares?

Alibaba Shares Surge Following China's AI Manufacturing Push

Alibaba's stock is experiencing significant gains today after China unveiled a comprehensive plan to boost artificial intelligence integration within its manufacturing sector.

The initiative, known as "AI+ Manufacturing," will provide financial support to thousands of innovative startups in Beijing, enabling them to increase their investment in research and development.

Despite today's upward momentum, Alibaba's stock price remains over 11% below its highest point in the past year.

The Impact of "AI+ Manufacturing" on Alibaba's Future

China's latest policy shift serves as a significant growth driver for Alibaba, positioning the company as a crucial player in the nation's industrial transformation rather than just a consumer-focused tech firm.

With the "AI+ Manufacturing" strategy, China aims to achieve a 70% AI adoption rate in manufacturing within two years, compelling more than 50,000 factories to embrace cloud and AI technologies.

As the dominant provider in this space, Alibaba Cloud is poised to gain substantially from this large-scale digital transformation.

Additionally, this move suggests a shift in regulatory tone, marking the end of the recent tech sector crackdown and reestablishing Alibaba as a key driver of China's economic ambitions.

Reasons to Consider Alibaba Stock for 2026

Looking ahead to 2026, Alibaba remains an appealing investment, partly due to the rapid uptake of its leading large language models, "Qwen," across both business and consumer markets.

Downloads of Qwen on Hugging Face have exceeded 700 million, with December alone seeing usage surpassing the combined total of the next eight most popular language models.

Even with this growth, Alibaba trades at just 26 times forward earnings, offering investors a cost-effective way to participate in the AI sector.

Fundamentally, the company continues to deliver strong cash flow from its core e-commerce operations, while expanding its presence in higher-margin cloud and AI services.

For income-oriented investors, Alibaba's dividend yield of 0.63% adds further appeal as a long-term holding.

Analyst Outlook: Wall Street's Positive Stance on Alibaba

Wall Street analysts remain optimistic about Alibaba, viewing it as an undervalued leader among Chinese technology stocks for 2026.

Barchart reports that the consensus rating for Alibaba is currently "Strong Buy," with an average price target near $200—implying a potential upside of around 20% from current levels.