Alibaba Group Holding Ltd

Alibaba runs two main businesses. The first is Chinese e-commerce, through the Taobao and Tmall marketplaces. Merchants pay Alibaba for advertising and other services to reach shoppers on these platforms. The second business is Alibaba Cloud, which rents computing power and AI tools to other companies.

Investors price Alibaba's AI spending as a cost that lowers profit. In the June 2026 quarter, revenue grew 9%, but net income fell 75% and non-GAAP net income fell 38%. Capital spending rose 75% to RMB 67.7 billion, and free cash flow was negative. Subsidies in the quick commerce war against Meituan and JD.com also lower e-commerce profit.

The market fears that these costs will stay high and that the AI spending will not earn a good return. For the market to change its view, Alibaba Cloud external revenue growth must stay at 45% or more, AI-related product revenue must continue to grow quickly, and free cash flow must start to improve. In August 2026, Alibaba sold new shares for about HK$80 billion to pay for AI infrastructure. Founder Jack Ma, Chairman Joe Tsai and CEO Eddie Wu then bought shares.

A second discount comes from US-China risk. Alibaba's US shares are ADRs, US-listed certificates that represent its shares. They depend on a variable interest entity (VIE) structure, because China limits foreign ownership of the business. On June 8, 2026, the US Department of Defense added Alibaba to its list of Chinese military companies, and Alibaba is suing to get off the list.

This discount will probably stay whatever the business does. The next test is the fiscal Q2 2027 report, expected in late November 2026. It will show if Cloud and AI revenue grow faster than the spending. If this growth continues over the next two to four quarters, the market can start to give credit for the AI investment.

A court decision on the military list, or a US step toward a trading ban, can change the US-China discount at any time.

1. Aug 26, 2026Passed

   HK$80 billion share placement for AI completesCompletion at the agreed price with proceeds used for AI infrastructure passes; a failed or repriced placement fails.Outcome: Alibaba completed the placement of 710 million new shares at HK$112.70 on August 26, 2026.
2. Nov 24, 2026 · est.Pending

   Fiscal Q2 2027 results: Cloud growth against capital spendingAlibaba Cloud external revenue growth above 45% and rising AI revenue with a smaller free cash outflow pass; slower Cloud growth or a larger outflow without revenue gains fails.
3. Feb 2027 · est.Pending

   Fiscal Q3 2027 results: margins and quick-commerce lossesHigher adjusted EBITA from smaller delivery subsidies and continued Cloud growth pass; falling profit again fails.

Every passed and failed checkpoint across all picks

Alibaba has net cash, and the pressure is cash flow. In the June 2026 quarter, capital spending was RMB 67.7 billion, mostly for AI infrastructure, and free cash flow was minus RMB 44.7 billion. Read more

• Alibaba trades as a US ADR that depends on a variable interest entity structure, so ADR holders do not own the Chinese operating licenses directly. Since June 8, 2026, Alibaba is on the US Department of Defense list of Chinese military companies. A move to the Treasury list can stop US investors from trading the shares, and more US-China tension can bring other trading limits.
• Alibaba uses subsidies in quick commerce and instant retail against Meituan, JD.com and Douyin. These subsidies caused a large drop in core China e-commerce profit in FY2026. Reports in 2026 say that the price war is less intense, but Alibaba gives no end date and no separate loss figure for quick commerce.
• Alibaba plans to spend more than RMB 380 billion (about $53 billion) over three years on AI and cloud infrastructure, and it had spent about RMB 190 billion by June 2026. In May 2026, CEO Eddie Wu said that compute spending will probably be more than this amount. If Alibaba Cloud growth slows or AI demand is weak, this spending can keep group profit low without a matching revenue gain.
• In August 2026, Alibaba sold about 710 million new shares for about HK$80 billion (about $10.2 billion) to pay for AI infrastructure. The new shares are about 3.6% of all shares after the sale. This dilutes existing shareholders even if the spending pays off later.
• Jack Ma has returned to public life, and he attended President Xi Jinping's meeting with private business leaders in February 2025. But the 2020-2021 antitrust crackdown and the forced restructuring of Ant Group showed that Chinese regulators can quickly take control of large tech platforms again. In April 2026, the market regulator fined Taobao, Tmall and Ele.me.
• Anthropic says that Alibaba copied capabilities from its Claude models through fraudulent accounts, and a US class action says that Alibaba did not disclose risks correctly. These cases can bring legal costs and limits on access to US AI models.

• September 22, 2026At its Apsara Conference, CEO Eddie Wu showed the Zhenwu V900 AI chip, which goes into mass production in Q1 2027. He said that the data center capacity that Alibaba Cloud operates will be more than 20 gigawatts by 2032. Alibaba gave no new spending amount. It will open its first cloud regions in Türkiye, Finland and the Netherlands in the next 12 months. The Hong Kong shares rose 5.1% that day.
• September 11, 2026Anthropic's September threat report said that more than 3,500 fraudulent accounts linked to Alibaba made more than 151 million exchanges with Claude from May to July 2026.
• August 26, 2026Caixin reported that Jack Ma, Chairman Joe Tsai and CEO Eddie Wu bought Hong Kong shares worth more than HK$800 million after the share sale. Hong Kong filings show HK$202 million from Tsai and Wu. The report of Ma's purchase comes from unnamed sources.