Aggressive discounting and market-share battles drain profits and investor confidence amid fears of long-term damage
Alibaba Group Holding (BABA) has lost over $100 billion in market value as its intensifying battle in China’s food-delivery market continues to erode investor confidence and profitability. Its Hong Kong-listed shares have dropped 27% since March, significantly underperforming Chinese tech peers, including Meituan and JD.com, who are also caught in this price war.
Analysts from Goldman Sachs and HSBC have lowered their price targets for Alibaba, citing escalating losses from the delivery business. Goldman now estimates Alibaba could sustain a loss of 41 billion yuan ($5.7 billion) through next June—roughly a third of its net income for the fiscal year ended March.
The food-delivery fight, intensified by JD.com’s formal market entry earlier this year, has shifted attention away from Alibaba’s AI ambitions—particularly those tied to DeepSeek—which had driven an 80% rally earlier in the year. Alibaba has since merged its food-delivery unit with its core business and aggressively increased subsidies to stay competitive.
Nomura estimates that Alibaba, Meituan, and JD.com collectively spent $4 billion on discounts in the June quarter alone. Meituan recently declared it was going into “attack” mode against Alibaba, while JD.com rolled out new customer incentives. The ongoing “coupon war” has drawn government criticism, with warnings about its toll on driver welfare and food safety.
Despite earnings headwinds, analysts remain largely bullish: 44 “buy” ratings and no “hold” or “sell” calls persist on Alibaba’s Hong Kong stock, which remains historically undervalued at under 11 times forward earnings. Still, concerns remain.
“If this continues, we could see deeper cuts to earnings and less capital flowing into AI,” said Nicholas Chui of Franklin Templeton. “Until then, we’re cautious.”
The market may need clear signs of discipline—or regulatory intervention—before investor sentiment improves.
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