Alibaba stock has surged from a low of $55.7 in 2022 to $123 as the company has benefited from several tailwinds like the artificial intelligence theme, the end of a regulatory crackdown by Beijing authorities, and its stock buybacks. This article explains why the BABA share price is about to surge ahead or after this week’s earnings.
Alibaba stock price has formed a golden cross
The weekly chart identifies a few unique patterns that may push the BABA stock price much higher in the long term. It has remained above the ascending trendline that connects the lowest swings since January last year. That is a sign that bulls remain in control for now.
The other main thing is that the Alibaba stock price has formed a golden cross pattern, which happens when the 50-week and 200-week Exponential Moving Averages (EMA) cross each other. A golden cross often leads to more gains.
A good example of this is to consider its opposite, which is known as the death cross pattern. BABA stock formed a death cross in September 2021 when it was trading at $170. It then plunged to a low of $55.7 in 2022.
Alibaba stock has also moved above the important resistance level at $117.60, the highest swing in October 2024. Moving above this price was notable as it invalidated the double-top pattern that was forming. It has also jumped above the 23.6% Fibonacci Retracement level at $116.18.
Therefore, the shares will likely continue rising as bulls target the next key resistance level at $148, the highest level in 2025. A move above that resistance will signal more gains to the 50% retracement at $183, up by 46% above the current level.
The bullish Alibaba stock price forecast will become invalid if it crashes below the key support at $96, the lowest point in April.
More catalysts for BABA share price
Alibaba stock price faces more catalysts ahead. First, the company will be a top beneficiary if the United States reaches a deal with China. In separate statements, Scott Bessent and Donald Trump hailed the two-day talks even as they provided no details on what was discussed.
A deal between the two countries would help Alibaba because of the volume of goods it sells in the US. Many US businesses use Alibaba’s website to source goods from the US, meaning that they would benefit from an agreement.
Further, Chinese officials may pitch purchases for American technology items like semiconductors as a way of narrowing US trade deficit. Such a move would include giving Alibaba access to chips from companies like NVIDIA and AMD.
The other bullish catalyst for the BABA stock price is the ongoing share repurchases. Data shows that the number of outstanding shares has dropped to 2.31 billion, down from 2.71 billion in 2020. Share repurchases help to boost a company’s stock by increasing its earnings per share (EPS).
Analysts are upbeat about the upcoming earnings even as recession risks have remained. The average revenue estimate is 240 billion yuan, up 8.17% from what it made in the same period last year.
The earnings per share is expected to come in at 12.8 yuan, up from 10.14 a year earlier. Alibaba has a long history of beating analysts estimates, meaning that it will likely do the same this quarter.
Alibaba stock is also fairly priced as it has a forward P/E ratio of 12.2, much lower than the S&P 500 average of 21. This valuation is also cheaper than other companies like Amazon and Chinese tech firms like Tencent and PDD Holdings.
Read more: 4 reasons Alibaba stock price is surging this year and what next
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