Alibaba Group Holding (BABA) reports second-quarter earnings Tuesday before the bell, and the timing couldn't be more interesting. Shares jumped 5.3% Monday after the company announced its Qwen AI app crossed 10 million downloads in just one week. Not bad for a newcomer in China's brutal AI wars.

The real question isn't whether Alibaba can still dominate e-commerce—it's whether cloud computing and artificial intelligence can transform from promising side projects into genuine growth engines. Analysts seem to think so, and they're putting serious numbers behind that optimism.

What Wall Street Expects

The Street is looking for second-quarter revenue of $34.43 billion, up from $33.70 billion a year ago. Alibaba has beaten revenue estimates in seven of the past 10 quarters, including most recently in Q1, so there's a decent track record here.

Earnings per share estimates sit at 81 cents, down from $2.15 in last year's second quarter. The company has topped EPS estimates in seven of the last 10 quarters and is riding a three-quarter beat streak.

Analysts Turn More Bullish on Cloud

Goldman Sachs recently raised its price target on Alibaba to $205 from $179, maintaining a Buy rating. The driving force? Cloud revenue that Goldman now expects to grow by more than 30% year-over-year for each of the next three fiscal years. That's not incremental growth—that's a genuine business transformation.

The analyst also pointed to breakthroughs in AI models and a diversified chip supply as reasons for the upgraded outlook. When you're competing in AI, having reliable access to chips matters enormously, especially given ongoing trade tensions.

Benchmark analyst Fawne Jiang echoed the bullish sentiment, reiterating a Buy rating and lifting the price target to $195 from $176. Jiang emphasized that Alibaba is simultaneously strengthening its cloud business and expanding e-commerce operations—walking and chewing gum at the same time, as it were.

The Qwen Phenomenon

Here's where things get interesting. Qwen isn't just another AI chatbot—it's Alibaba's attempt at creating a unified super app for the AI era in China. The app consolidates features from the company's Tongyi app and Quark browser, built on Alibaba Cloud's open-source Qwen model.

Ten million downloads in week one is impressive in any context, but especially in a market where DeepSeek and other well-funded Chinese AI companies are fighting for attention. Alibaba is marketing Qwen as "the best personal AI assistant" and—crucially—it's free. No subscription fees, no paywalls. The company is betting on a "free-for-all" strategy to drive mass adoption while competitors charge monthly fees.

So how does Alibaba make money? The plan is to monetize through cloud services and data—get users hooked on the AI assistant, then sell them the infrastructure and analytics on the backend. It's a classic platform play.

The Broader AI Push

Alibaba isn't working alone here. Ant Group, which is partially owned by Alibaba, recently launched its own AI assistant called LingGuang that can reportedly create apps in about 30 seconds. Alibaba founder Jack Ma even made a rare appearance at Ant Group's Hangzhou campus to spotlight the LingGuang launch. While Ma no longer runs Alibaba, he remains one of its most iconic figures, and his public endorsement carries weight.

The company's Cloud Intelligence Group posted 26% year-over-year revenue growth in the first quarter, fueled by rising demand for cloud services and AI products. Even more striking: AI-related product revenue has grown by 100% or more for eight consecutive quarters. That's the kind of sustained momentum that gets Wall Street's attention.

"Looking ahead, we remain committed to investing in our two strategic pillars of consumption and AI + Cloud to capture historic opportunities and drive long-term growth," CEO Eddie Wu said after first-quarter results. "Historic opportunities" is bold language, but the early numbers suggest it might not be hyperbole.

What to Watch Tuesday

E-commerce will still dominate Alibaba's overall revenue—that's not changing anytime soon. But the commentary around cloud and AI will likely determine whether shares continue their 2025 rally. Alibaba stock is up 89.3% year-to-date, trading at $161.00 on Monday within a 52-week range of $80.06 to $192.67.

Investors will want concrete updates on cloud revenue growth, AI product adoption metrics, and whether the Qwen momentum is sustainable or just a launch-week sugar rush. If management can demonstrate that cloud and AI are becoming meaningful contributors to the bottom line—not just interesting side projects—the bullish thesis gets a lot stronger.

The stakes are clear: Alibaba needs to prove it can win in the next era of tech, not just coast on e-commerce dominance. Tuesday's earnings report will show whether "historic opportunities" is a real strategy or just a nice tagline.