Shares of Chinese e-commerce behemoth Alibaba Group Holdings (BABA) are up 34% over the past year and are poised to rise even higher despite having global operations amid an escalating trade war. With the majority of its customer base domestically located, Alibaba is facing strong growth potential not only with online retail but also with its cloud-computing business, and in the more traditional brick-and-mortar retail space as well.

That potential is why Argus analyst Jim Kelleher believes the Amazon.com of China deserves a price target of $275, according to Barron’s, implying further upside of nearly 44% and helping it to pull ahead of Amazon on this year’s stock performance.

   1-Year Stock Growth
 Alibaba  34.11%
 Amazon  70.1%
 S&P 500  11.6%
 Nasdaq 100  22.3%

Minimal Trade War Effects

As one of the “super seven” cloud data-center companies, a club of the top technology firms best positioned to provide cloud-service access internationally, Alibaba is no doubt exposed to the growing international trade tensions between the world’s two largest economies. However, Kelleher thinks the impact will be minimal, as the majority of the company’s sales and earnings are recognized within China.

"Alibaba’s risks related to a potential trade war are relatively low, given this strong domestic base of business" - Jim Kelleher"

For fiscal year 2018, retail and wholesale revenue from China comprised 74% of Alibaba’s total revenue, compared to just 8% for international retail and wholesale revenue. The company’s retail marketplace boasts as many as 552 million active annual China-based consumers and recognized $768 billion in gross merchandise volume transactions in fiscal year 2018, a year-over-year increase of 28% compared to an increase of 22% for fiscal year 2017. (To read more, see: Global Expansion More Crucial for Amazon Than Alibaba.)

Domestic and Cloud Growth Opportunities

Alibaba’s cloud-computing business, which brought in 5% of the company’s total revenue in fiscal year 2018, saw year-over-year growth of 101%. In a call with analysts in mid-spring, Maggie Wu, the company’s chief financial officer indicated that both commerce and the cloud business would lead revenue growth over the next fiscal year.

Considering the under-built nature of China’s physical retail infrastructure, especially in smaller cities, Alibaba’s brick-and-mortar retail and wholesale sites also provide ample opportunity for future growth. Over the past three years the company has been grabbing up stakes in grocers and electronics chains, including electronics retailer Suning, Intime Retail and Sun Art, one of China’s largest grocery chains.

Meanwhile, Alibaba is also building its own chain of stores called Hema Xiansheng, which offers customers a combination of a fresh-food market, a restaurant and home delivery facilities. While helping the company grab a slice of the 84% of China’s physical goods sales that still take place offline, these brick-and-mortar sites also create more points of contact with customers, allowing them to amass even more amounts of user data, according to the New York Times. (To read more, see: Is Alibaba Trying to Take Over Food Delivery, Too?)

Southeast Asian Expansion

It’s also not just in China that Alibaba is expanding. The company recently doubled its investment in Southeast Asia, investing another $2 billion in its Singapore-based e-commerce subsidiary Lazada Group, which sells products ranging form lipstick, carwax and instant coffee to smartphones, according to the Wall Street Journal.

Southeast Asia is home to a population of around 600 million and its e-commerce market has grown by an annual rate of more than 40% since 2015, bringing in $10.9 billion in revenue in 2017. By 2025, the market is expected to grow to $88.1 billion.

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