Alibaba Stock Under Fire: ByteDance’s Aggressive Push in 2026

• Why Is Alibaba’s Stock Dropping?
• ByteDance vs. Alibaba: The Cloud War Heats Up
• Can Qwen Save Alibaba’s Consumer Business?
• Profitability Crisis: Why Are Margins Shrinking?
• Wall Street’s Verdict: Buy or Bail?
• FAQ: Alibaba’s Make-or-Break Moment

Alibaba, China’s e-commerce and cloud computing giant, faces mounting pressure as ByteDance—TikTok’s parent company—rapidly gains ground in the AI-cloud sector. With weak economic data from China and new U.S. tariff threats, Alibaba’s stock dropped over 3% recently. While Alibaba still leads in market share, ByteDance’s aggressive pricing and AI-focused strategy are closing the gap. Meanwhile, Alibaba’s Qwen chatbot shows promise, but profitability remains a concern. Wall Street remains bullish, but can Alibaba hold its ground? Here’s the full breakdown.

Why Is Alibaba’s Stock Dropping?

Alibaba’s shares took a 3% hit on Monday as investors weighed ByteDance’s growing threat in the cloud space alongside broader economic headwinds. China’s Q4 GDP growth slowed to 4.5%, and December retail sales ROSE a meager 0.9% year-over-year—signaling weak consumer sentiment. Add to that U.S. tariff threats under President Trump, and it’s no surprise Asian markets are jittery. "The dual pressure of competition and macro risks is squeezing Alibaba’s margins," notes the BTCC research team.

ByteDance vs. Alibaba: The Cloud War Heats Up

According to IDC, Alibaba still dominates China’s AI-cloud market with a 23% share in H1 2025, but ByteDance is catching up fast at 13%. How? By slashing prices and targeting enterprise clients with AI-optimized solutions. ByteDance’s edge in compute-heavy workloads (think AI training) is particularly worrying for Alibaba. "They’re playing the long game—sacrificing margins for market share," says a Jefferies analyst. Meanwhile, Alibaba’s cloud growth is expected to slow to 35% YoY in Q3 2026.

Can Qwen Save Alibaba’s Consumer Business?

Alibaba’s answer to ByteDance’s cloud push? Qwen, its AI chatbot turned "super app." Since its November 2025 launch, Qwen has hit 100M monthly users by handling tasks like food orders and travel bookings across Alibaba’s ecosystem (Taobao, Alipay, etc.). Jefferies calls it a "game-changer," but monetization remains unclear. "It’s sticky, but can it drive revenue?" asks a TradingView commentator. With e-commerce still contributing over 50% of Alibaba’s sales, Qwen needs to deliver—fast.

Profitability Crisis: Why Are Margins Shrinking?

Alibaba’s Q2 2026 numbers were ugly: adjusted EBITDA plunged 78%, and free cash Flow turned negative (-21.8B RMB). Blame heavy investments in AI and "quick commerce" (like 30-minute deliveries). Consensus EPS for FY2026 was cut by 5% to $6.10, per TradingView data. "They’re spending like there’s no tomorrow," quips a Bloomberg analyst. With new e-commerce regulations kicking in February 2026, costs could rise further.

Wall Street’s Verdict: Buy or Bail?

Despite the chaos, 13 analysts still rate Alibaba a "buy" with a $203.66 average target (23% upside). The bull case hinges on cloud growth and Qwen’s potential. Bears point to ByteDance’s rise and regulatory risks. "It’s a high-stakes bet on execution," summarizes the BTCC team. Earnings on February 19 will be pivotal—watch for cloud numbers and management’s turnaround plan.

FAQ: Alibaba’s Make-or-Break Moment

How is ByteDance challenging Alibaba?

ByteDance is undercutting Alibaba in cloud services with lower prices and specialized AI tools, grabbing 13% market share in H1 2025.

What’s Qwen’s growth trajectory?

Qwen hit 100M monthly users in under 3 months, but its ability to monetize via Alibaba’s apps (Taobao, etc.) is untested.

Are Alibaba’s dividends safe?

With negative free cash flow, dividends could be at risk if profitability doesn’t improve by late 2026.