Alibaba Group (NYSE: BABA), the top holding in famed investor Michael Burry’s portfolio, continues to record an impressive run in 2025, with the equity hitting consistent green sessions.
Interestingly, the current momentum is raising concerns about the sustainability of BABA’s rally, with momentum indicators suggesting a possible stall might be on the horizon, as evidenced by its latest Relative Strength Index (RSI).
In this regard, BABA has entered the most overbought zone ever, with the RSI reading 86.52 at the close of the last trading session.
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Readings for this metric typically range from 0 to 100. A value above 70 is generally considered overbought, signaling that a stock may be due for a correction or consolidation.
Indeed, this momentum coincides with Alibaba’s steep rise in share price since late 2024. BABA was trading at $143.75 at press time, ending the last trading session up 5.7%. Year-to-date, Alibaba has rallied almost 70%.
It is worth noting that Burry, known for his accurate bets during the 2008 financial crisis, has recently lowered his stake in BABA by 25% as of Q4 2024. However, the stock maintains the leading position with a share of 16.43%.
Investors may now reevaluate their positions in Alibaba given its overbought condition and Burry’s decision to reduce his stake in the Chinese technology giant, especially considering his market reputation.
BABA stock’s key fundamentals
Despite this, BABA has maintained its upward momentum, which is supported by strong fundamental catalysts. Notably, the stock surged further after its December quarter earnings results were released.
Alibaba reported a net income of 48.945 billion yuan ($6.75 billion), exceeding analyst expectations of 40.6 billion yuan ($5.60 billion) and marking a substantial improvement from the 14.433 billion yuan ($1.99 billion) recorded in the same period last year.
Revenue also surpassed forecasts, reaching 280.154 billion yuan ($38.64 billion) against the anticipated 279.34 billion yuan ($38.53 billion).
Adding to the optimism, investors appear increasingly confident amid signs of a more favorable regulatory environment for Chinese tech firms. Alibaba founder Jack Ma’s rare public meeting with President Xi Jinping on February 17 reinforced this sentiment.
During the meeting, Xi expressed “unwavering support” for entrepreneurs, suggesting a potential easing of regulatory pressures.
Beyond regulatory developments, Alibaba’s aggressive push into artificial intelligence (AI)—marked by six consecutive quarters of triple-digit cloud growth—positions it well within market trends favoring tech companies investing in the sector.
At the same time, reports of GameStop (NYSE: GME) CEO Ryan Cohen’s $1 billion stake in Alibaba signal strong confidence, further fueling BABA’s rally.
Wall Street’s take on BABA stock
Meanwhile, Wall Street is also bullish on BABA, with several analysts anticipating continued price growth.
For instance, Citi’s Alicia Yap reaffirmed her ‘Strong Buy’ rating on January 9, raising her price target from $133 to $138, citing previously conservative merchandise volume estimates.
Barclays’ Jiong Shao maintained a ‘Strong Buy’ after Alibaba’s earnings but lowered his target from $137 to $130, pointing to margin concerns amid ongoing investments.
While Alibaba’s strong fundamentals continue to influence its price surge, the stock’s overbought status and Burry’s reduced stake suggest potential caution. Therefore, investors should assess whether BABA’s rally has more room to grow or if a correction is imminent.
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