After reporting an incredibly strong quarter, Alibaba Group Holding Limited (NYSE:BABA) still has the potential to give its investors more gains. The company exceeded revenue and earnings forecasts. All of its key metrics showed growth in the millions of users. Expecting higher growth ahead for Alibaba is an understatement.

Solid Second-Quarter Earnings

BABA reported revenue of $6.98 billion in core commerce, up 63%. Digital media and entertainment, albeit small in revenue terms at $721 million, improved by 33%. Once again, the cloud computing unit showed strong growth, improving nearly 100% to $447 million.

Alibaba showed sequential growth in user activity. Annual active consumers grew by 22 million users to 488 million, while mobile MAUs (monthly active users) jumped 20 million to 549 million.

Alibaba constrained its product development expenses in the quarter, while sales and marketing and G&A (general and administrative) also held steady. Both the 61% year-over-year revenue increase and steady expenses yielded a 71% increase in net income. Alibaba earned $1.29 a share (non-GAAP) in the second quarter. Cash flow nearly doubled from last year, jumping to $3.4 billion.

Positive Drivers Ahead for BABA Stock

Alibaba’s seasonal strength ahead will start with Nov. 11, or Single’s Day. Every year, sales get better than the last. In China, the event is bigger than that of Cyber Monday in the United States.

Fundamentally, Alibaba Cloud is one of the company’s many segments that will drive both revenue and profits higher. Just as cloud services will add meaningfully to Amazon.com, Inc. (NASDAQ:AMZN) net sales, Alibaba Cloud will also add to most of Alibaba’s revenues. Amazon gave net sales guidance for Q4 in the range of $56 billion to $60.5 billion.

From that, operating income will come in at between $300 million and $1.65 billion. Amazon Web Services (AWS) is clearly a big part of Amazon’s revenue. In Q3, management hinted at that (the company does give segment level estimates for AWS).

Mobile Taobao continued to resonate with its Chinese consumers. 549 million users accessed the retail marketplace monthly. Alibaba owes its success to its advanced real-time product-recommendation engine. Short-form videos and subscription-based content also drove consumers back to the marketplace.

Mobile Taobao’s strategy requires patience. The videos and news feed do not rush to monetize the newly acquired traffic. The company first optimizes the user experience, then it improves its algorithm to make sure it meets the users’ demands first.

In Q2, Alibaba ran promotional and marketing campaigns that attracted new customers. That platform now has over 500,000 independently owned stores in its network.

Investing Back in Its Business

Alibaba is not slowing the pace of its investment back into the business. On its conference call, the company committed to $15 billion in spending over the next three years:

“So regarding your question on the US$15 billion spend, this $15 billion is going to be spent over the next three years in the R&D areas for our group. So if you look at the current product development costs we’ve incurred, which is around 10%, 11% of total revenue, so clearly, we’re going to increase the spending in this technology development.”

Alibaba said it would spend now on tomorrow’s advanced technologies. This includes deep learning, areas of artificial intelligence, and quantum computing.

The investment here relies on the company attracting the right staff who fit roles to cover those areas. By the time those technologies become mainstream, Alibaba will already have the people in the right places who are experts in those areas.

Takeaway for BABA Stock

The BABA stock price is anywhere from slightly overvalued to worth at least $200 a share, depending on the financial model (see below) used on finbox.io to calculate its fair value.

But given its back-to-back string of solid quarterly results, chances are good that BABA stock will continue to reward its shareholders.