Alibaba’s (BABA) Generative AI Drive to Grow AIDC Segment

Alibaba BABA continues to work hard to strengthen its Alibaba International Digital Commerce Group (AIDC) segment, which includes Lazada, AliExpress, Trendyol, Alibaba.com and other businesses operating in the international retail and wholesale markets.

Alibaba is currently using generative artificial intelligence (AI) technologies to strengthen its global marketplaces, including AliExpress and Lazada.

AIDC uses AI-powered tools to help cross-border sellers with translations, content creation, and product returns.

Year-to-date results

Image Source: Zacks Investment Research

Strengthening the AIDC segment helps develop prospects

According to a report by Statista, the global e-commerce market is projected to generate revenues of $4.12 trillion in 2024. This figure is expected to reach $6.48 trillion by 2029, implying a CAGR of 9.5% from 2024 to 2029. Strengthening the AIDC segment will enable Alibaba to capitalize on a solid growth opportunity in the e-commerce space.

Alibaba leaves no stone unturned to make AliExpress successful. It has created synergies between AliExpress and Cainiao’s cross-border logistics operations to strengthen AliExpress’ five-day and ten-day delivery services. BABA has also increased investment in key markets to improve customer experiences, expand its consumer base, and strengthen AliExpress’ market position worldwide.

AliExpress also announced several promotional campaigns for customers after being named the exclusive global e-commerce partner of UEFA EURO 2024.

Promotional campaigns aim to improve user experience and increase the popularity of the AliExpress platform among international customers and sports enthusiasts, thereby expanding its global reach.

In addition, Alibaba.com recently launched Alibaba Guaranteed for global small and medium-sized enterprises (SMEs).

Alibaba Guaranteed is a platform that simplifies B2B cross-border trade for SMEs by offering supply chain reliability. It provides secure product sourcing at fixed prices, with guaranteed delivery within 72 hours.

The above-mentioned activities will continue to drive the results of the AIDC segment, which is currently a key growth engine for the company.

Alibaba suffers from strong competition

Alibaba faces fierce competition in the global e-commerce market from giants such as Amazon AMZN and eBay EBAY, as well as its domestic competitor, JD.com JD.

Amazon remains the e-commerce market leader thanks to its strong Prime presence, strong distribution strength, expanding fulfillment network and growing relationships with third-party sellers.

eBay, on the other hand, is making a concerted effort to support sellers, further strengthening its position in the e-commerce space. It recently introduced an updated tool, “eBay Advertising,” that simplifies advertising, increases listing visibility, and supports greater sales momentum, with the goal of helping sellers increase sales on the platform.

JD.com has expanded its international express delivery service from Guangzhou and Shenzhen to almost every district in China, increasing its popularity among SMEs. The service offers efficient logistics solutions for various products, including documents and clothing, among others, with the United States, the United Kingdom and Germany being the main destinations.

Application

Alibaba shares have returned 0.2% in the year-to-date period, lagging the industry’s 20.8% growth. BABA shares have also lagged Amazon and eBay’s gains of 31.5% and 22.7%, respectively, in the year-to-date period. However, JD.com shares have lost 4.7% in the same period.

Unfavorable estimate revisions are also notable. The Zacks Consensus Estimate for BABA’s fiscal 2025 earnings is $8.20 per share, which would represent a decline of 4.9% from the prior-year figure. Over the past 60 days, the figure has declined 0.7%.

Despite the fierce competition, Alibaba’s growing AI operations, strong momentum in its international retail and wholesale business, and the expansion of its Chinese wholesale business are expected to continue to drive the company’s revenue growth in the coming days.

The Zacks Consensus Estimate for 2025 is projecting total revenues of $138.63 billion, representing year-over-year growth of 6.2%.

Alibaba currently has a Zacks Rank #3 (Hold). You can see The complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click to get this free report