Alibaba Group stock traded lower Thursday, with a closely watched earnings report for the Chinese technology giant due tomorrow morning.
Alibaba stock has rallied more than 40% this year. But its gains came in the first three months of the year. Share-price gains for Alibaba have stalled recently amid questions about the Chinese economy, restrictions on imports of AI processors from the U.S., and the broader trade tensions between the U.S. and China.
Fiscal first-quarter earnings due tomorrow morning could help Alibaba restart its stock rally or confirm the investor fears that have kept Alibaba stock trading below 52-week highs from March. Here's what to watch:
Alibaba Stock: Earnings Numbers To Watch
Overall, analysts polled by FactSet project that Alibaba's earnings for the June quarter will decrease 13% year-over-year to 14.16 yuan per American depositary share, or $1.98 per share.
Sales are seen rising 3.5% overall to 251.45 billion yuan, or $35.15 billion. That would mark a slight decrease from Alibaba's 6% growth in its March-ended quarter.
That growth includes a projection that Alibaba's Cloud Intelligence revenue rose 21% for the June quarter, according to FactSet.
As China's top cloud services provider, Alibaba has been moving quickly to roll out AI services. Those include updates to it Qwen AI large language models. The tech giant has pledged to spend more than $50 billion over the next three years on AI-related infrastructure for its cloud business.
Investors will be monitoring whether Alibaba's AI investment are paying off yet for the tech giant.
Alibaba's Food Delivery Competition
Investors will also be closely watching just how much Alibaba's earnings are getting squeezed by increased competition for food delivery in China.
Rival JD.com is attempting to muscle into the market for on-demand food delivery, setting off a broader price battle.
Mizuho analyst Wei Fang said in a July 24 client note that "increased competition in local commerce, mainly food delivery, is weighing on margins for all major players including Alibaba and JD."
U.S.-listed JD stock fell earlier this month when it posted a sharp decline in Q2 earnings, despite its strongest revenue growth in several years.
Hong Kong-listed shares of Chinese food-delivery giant Meituan slid on Wednesday when the company reported a 97% decrease in profits. The firm blamed "irrational competition" in the food-delivery sector.
Meituan's commentary is weighing on shares of Alibaba. BABA stock fell 1.6% on Wednesday. The shares shed nearly 2% to 119.83 in recent action on the stock market today.
Alibaba Stock Near 21-Day Line
The slide on Thursday has pushed Alibaba stock below its 21-day moving average. Shares had jumped above the short-term investor support line late last week amid a broader market rally.
Alibaba is trading roughly flat overall in August.
Meanwhile, Alibaba stock has an IBD Composite Rating of 95 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one.
