By George Glover

Alibaba Group stock tumbled on Monday, taking some of the shine off a recent rally for the Chinese online retailer.

Alibaba's shares fell 3.5% to 160.40 Hong Kong dollars. The benchmark Hang Seng Index closed 1.1% lower as investors ditched risk assets after President Donald Trump threatened to impose tariffs on eight NATO nations.

The selloff came after China said its fourth-quarter gross domestic product grew 4.5% from a year ago, slowing from 4.8% for the third quarter.

The data suggest that consumer spending remains weak, with retail sales up just 0.9% from a year ago in December -- the weakest growth since 2022.

That doesn't bode well for Alibaba's core e-commerce business, which analysts expect to account for 536 billion Chinese yuan ($76.9 billion) in sales for the fiscal year ending in March. That's about 52% of the company's total sales.

Weak consumer spending isn't the only worry for investors -- its valuation is in focus. Alibaba's shares have surged 90% over the last year, boosted by China's artificial-intelligence boom. The company pledged in September to invest $53 billion in AI over the next three years, and said in November that its Qwen AI app had racked up 10 million downloads in its first week.

The rally has made the stock look a little expensive, though. Alibaba now fetches about 28-times its earnings for the current fiscal year, up from 18-times as of March 2025.

To justify that valuation, investors will need the pivot to AI to pay off -- particularly if retail sales in China carry on slowing.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 19, 2026 07:57 ET (12:57 GMT)

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