BABA vs. MSFT: Which ’Strong Buy’ AI Stock Offers Bigger Gains? Wall Street Analysts Weigh In

AI stocks are red-hot—but which giant delivers the knockout returns? Alibaba and Microsoft both wear the 'Strong Buy' crown, yet analysts are split on who leads the charge.

The Cloud Clash

Microsoft's Azure AI platform dominates enterprise deals while BABA's cloud arm surges across Asia. Both stack AI into existing ecosystems—but growth trajectories aren't identical.

Regulation vs. Innovation

BABA battles regulatory headwinds but trades at a steep discount. MSFT enjoys smoother skies but premium valuations. Which risk-reward ratio wins?

The Analyst Divide

Wall Street's best keep revising targets—upside projections vary wildly. Some see hidden value in BABA's depressed multiples; others bet on MSFT's unstoppable enterprise moat.

One thing's clear: in AI investing, sometimes the 'strong buy' is just what your broker already owns—convenient, right?

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Alibaba (NYSE:BABA) Stock

Alibaba is China’s largest e-commerce and cloud-services company, running platforms such as Taobao, Tmall, and AliCloud. The stock has surged more than 94% this year, fueled by AI-driven cloud demand and strong cloud growth. The company has been ramping up investment in AI and computing hardware, setting aside 380 billion yuan ($53 billion) over three years to advance its chip and cloud initiatives.

Recently, Alibaba reported mixed Q1 FY26 earnings results. The company posted revenue of 247.7 billion yuan ($34.6 billion), up 2% year-over-year but below the consensus of 252.9 billion yuan. Adjusted earnings per ADS came in at $2.06, above expectations of $1.98, helped by cost controls and better margins in non-core units. The Cloud Intelligence Group was the highlight, with revenue up 26% to 33.4 billion yuan, driven by rising enterprise demand for AI services and steady growth in China’s internet sector.

Following the earnings results, several Wall Street analysts raised their price targets, citing Alibaba’s growing cloud business and rising role in AI. For instance, Goldman Sachs analyst Ronald Keung raised his price target on Alibaba to $163 from $147, while keeping a Buy rating on the back of faster international e-commerce recovery and stronger growth in the cloud. He said Alibaba’s new focus is on becoming an “AI + everyday consumption app” and an “AI + Cloud hyperscaler.”

Is Alibaba a Good Stock to Buy?

Overall, Wall Street has a Strong Buy consensus rating on Alibaba stock based on 16 Buys and one Hold. The average Alibaba price target of $166.43 implies about 0.16% upside potential from current levels.

Microsoft (NASDAQ:MSFT) Stock 

Microsoft is the world’s largest software company and a dominant player in cloud computing through its Azure platform. The stock has climbed over 22% this year, supported by rapid adoption of generative AI tools and continued strength in its cloud business. The company has been expanding its AI footprint through its partnership with OpenAI and by embedding AI features across Office, Windows, and Azure. 

The company delivered strong results for the fourth quarter of Fiscal 2025, posting revenue of $76.4 billion, above analysts’ estimates of $73.8 billion. Its Intelligent Cloud unit was the standout, with revenue up 26% to $29.9 billion, driven by a 39% surge in Azure and other cloud services.

Turning to Wall Street, five-star analyst Keith Weiss at Morgan Stanley maintained a Buy rating on Microsoft with a price target of $582 per share. He pointed to the recent 10% dividend hike to $0.91 per share as proof of the company’s steady shareholder returns. Weiss also pointed to Microsoft’s $55 billion buyback plan and strong cash flow, giving the company more room to reward investors. Looking ahead, he expects mid-teens revenue growth and disciplined spending to drive about 16% annual EPS growth through FY28, supporting a 17% total return profile. 

Is Microsoft a Buy or Sell? 

According to TipRanks, MSFT stock has received a Strong Buy consensus rating, with 33 Buys and one Hold assigned in the last three months. The average Microsoft stock price target is $626.8, suggesting a potential upside of 22.91% from the current level.

Conclusion

Both Alibaba and Microsoft earn Strong Buy ratings from Wall Street analysts, reflecting confidence in their cloud and AI growth stories. However, with Alibaba stock already trading NEAR its price target, upside looks limited. Microsoft, on the other hand, offers nearly 23% upside and stronger earnings visibility, making it the mega-cap cloud stock with more room for gains.