Alibaba: Buy The AI Spending Panic After Q2

Sharon McArd 1.08K Followers Follow Summary Alibaba Group Holding Limited stock remains a Buy as AI Cloud revenue and profitability inflect, despite a messy quarter with sharply lower profits and negative free cash flow. AI Cloud and Compute Services revenue surged 45% year-on-year, with AI product revenue achieving triple-digit growth for the twelfth consecutive quarter and adjusted EBITA up 133%. Heavy CapEx—up 75% to RMB67.68 billion—pressured free cash flow, but BABA management expects AI-related CapEx to break even within three years, supported by a still profitable commerce base. The current valuation reflects China risk and near-term earnings pressure, but accelerating AI monetization and cloud growth create an attractive entry point for long-term BABA investors. maybefalse/iStock Unreleased via Getty Images Alibaba Group Holding Limited ( BABA ) just gave the market exactly the kind of quarter that creates a debate. Revenue grew, AI Cloud picked up again, and the company proved that it could grow earnings even This article was written by Sharon McArd 1.08K Followers Follow I’m a retail investor based in Sydney with three years of experience focusing on achieving financial independence through strategic investments in AI-driven companies. Although I don’t come from a traditional finance background, I’ve developed a strong passion for understanding how artificial intelligence is transforming the global economy. Over the past few years, I’ve become increasingly fascinated by the possibilities of AI—how it’s reshaping industries, driving innovation, and creating new investment frontiers. My portfolio is primarily centered around leading AI-related companies such as NVIDIA and others at the forefront of this technological revolution. I believe we’re only in the early stages of AI’s impact, and the coming decade will present remarkable opportunities for both retail and institutional investors. My goal is to continue learning, sharing insights, and building long-term wealth by investing in the technologies shaping our future. Analyst’s Disclosure: I/we have a beneficial long position in the shares of BABA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.