BABA Should I Buy
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Alibaba Group Holding Ltd (BABA) is not a strong buy at the moment for a beginner investor with a long-term strategy. While the stock is oversold based on RSI and hedge funds are increasing their positions, the company's declining net income, EPS, and operating margins, coupled with mixed analyst ratings and a lack of strong trading signals, suggest holding off on immediate investment.
The stock is currently oversold with an RSI of 4.194, indicating a potential rebound. However, the MACD is negatively expanding (-2.639), suggesting bearish momentum. Moving averages are converging, signaling indecision in the market. Key support levels are at 132.602 and 126.058, with resistance at 143.195 and 153.788.
Hedge funds are significantly increasing their positions (+222.92% last quarter). Alibaba is making strategic moves in AI and cloud services, including hiring top talent and collaborating with major tech firms on chip supply chains.
Declining financial performance with a -52.12% YoY drop in net income and -53.12% YoY drop in EPS. Analysts have issued mixed ratings, with recent downgrades citing concerns over operating margins and rising liabilities. The MACD indicates bearish momentum, and the stock has been trading downward recently.
In 2026/Q2, revenue increased by 4.85% YoY to $34.62 billion, but net income dropped by -52.12% YoY to $2.93 billion. EPS fell by -53.12% YoY to $0.15. Gross margin improved slightly to 38.82%, up 1.09% YoY.
Analyst sentiment is mixed. Goldman Sachs recently added Alibaba to its APAC Conviction List, but Erste Group and Freedom Capital downgraded the stock to Hold, citing concerns over declining margins and rising capital expenditures. Jefferies and Arete maintain Buy ratings, with price targets of $190 and $225, respectively.
