BABA heads into its fiscal Q4 2026 earnings today with options traders positioned at one of the most bullish extremes of the past year — a stark contrast to the stock's own rollercoaster ride over recent months.
The clearest signal comes from options markets. Call demand has surged well above normal, with the put/call ratio at 0.60 — nearly 2.7 standard deviations below its 20-day average of 0.68. That makes it one of the most call-skewed readings in the past 52 weeks, whose range runs from 0.40 to 1.07. Traders are not hedging into this print; they are reaching for upside. That confidence is reflected in the stock itself, which surged 8.2% on May 13 alone and is up 14.5% over the past month to $145.81, recovering strongly after a bruising patch in March and April.
The bull case rests on a combination of cloud momentum, e-commerce stabilisation, and signs that the AI investment cycle is beginning to pay off. Revenue for the latest reported quarter rose 5% year-on-year — or 15% stripping out disposed assets — beating consensus by around RMB 3 billion. Daily active users on Taobao are up 20%, a metric bulls point to as evidence that Alibaba's ecosystem is regaining relevance. The bear pushback is sharper on margins. China e-commerce EBITA margins have been trimmed to 23% for the second half of fiscal 2026, with EBITDA falling short of consensus in recent quarters as quick-commerce investments and cloud infrastructure spending weigh on cash generation. Analysts have broadly maintained positive ratings while cutting targets — JP Morgan holds Overweight but dropped its target from $215 to $205 in March; Barclays kept Overweight and trimmed to $186 in April. The direction of travel on price targets has been southward, even as conviction on the rating itself has held. With a 38% return potential implied by analyst consensus and a PE of around 16x, the valuation case is not stretched — but it depends heavily on the margin story clearing.
Short interest adds a notable counterpoint to the bullish options stance. Borrowed shares total roughly 38.7 million, essentially flat on the day but up about 5.7% on the week. Availability remains moderate — the lending market is not tight, and with a cost to borrow just above 0.5% (easing 13% over the past month), there is no meaningful squeeze dynamic at work. The ORTEX short score of 51.5 sits close to the mid-point of its range, reflecting neither a crowded short nor a particularly relaxed one. Crucially, the last comparable earnings print — March 2026 — saw the stock drop 8.9% on the day and fall 6.7% over the following five days. With JD up nearly 7% on the session and broader Chinese internet names rallying hard, BABA's 8% single-day move has lifted it in sympathy with the sector. Whether the earnings themselves sustain that move is the question today's print will answer.
The report is less a test of growth — the revenue trajectory is broadly accepted — and more a test of whether Alibaba can demonstrate a credible path to margin recovery while continuing to invest aggressively in AI and quick commerce.
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