Alibaba’s (BABA) AI Growth Prospects Remain Masked by Short-Term Challenges

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Alibaba Group Holding Limited (BABA) offers promising artificial intelligence (AI) growth prospects, but its short-term struggles continue to weigh on the stock. The Chinese tech giant has failed to gain traction following its regulatory nightmare in 2020. In the past 12 months alone, Alibaba stock has lost around 37% of its value. This lackluster market performance has compressed Alibaba's forward P/E multiple to just 14x. Part of this multiple contraction can be explained by Alibaba's net income halving from FY2020 through the first quarter of FY2027. Today, the company is taking steps to unlock shareholder value by shedding non-core assets. Its planned spin-off of the chip unit, T-Head, is the latest example.