Track market-moving stories before they get noisy

A named executive's public shipment milestone measures ecosystem reach; cloud results provide a separate financial yardstick.

Summary

The cumulative architecture-based chip count does not disclose licensing income or incremental cloud revenue.

Alibaba BABA has a six-billion-chip headline. Investors still need the earnings connection. Its U.S. depositary shares traded at $108.72, up approximately 0.14%, at 10:18 a.m. ET on October 20. The South China Morning Post reported that chief scientist Meng Jianyi announced cumulative shipments exceeding six billion chips based on XuanTie architecture. That measures the architecture's reach. It does not mean Alibaba sold six billion chips this quarter—or tell shareholders how much profit those shipments generated.

The cloud business offers a more useful financial benchmark. Alibaba's August 20 update put quarterly AI Cloud and Compute Services revenue at roughly $7.1 billion and adjusted EBITA at $830 million, implying a margin of about 11.7%. More than 650 external customers were also using its Zhenwu M890 processor through cloud services. Those figures demonstrate an existing commercial operation, but they do not establish how much XuanTie adoption contributes to it. Dividing quarterly cloud revenue by cumulative chip shipments would produce a neat number with no useful economic meaning.

At $108.72, the shares sit 11.31% below the $122.59 GF Value estimate shown in the valuation graphic. That is a model's assessment, not a guaranteed margin of safety. My test is whether wider processor adoption produces licensing income, attracts paying cloud customers or improves profitability after the costs of serving them. Customer counts help; spending and retention matter more. Six billion chips establish scale. The investment case needs evidence of how much of that scale reaches shareholders.

Disclosures
I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

Click for the complete disclosure

SummaryAlibaba Group Holding Limited is down 41% from its 2025 peak as earnings recovery lags and capex expectations rise, but profitability recovery remains plausible.Q1 revenue grew 9% YoY, driven by China Quick Commerce and Cloud (+45% each), while traditional e-commerce declined and AI investments increased cash burn.Alibaba's investment case is shifting from mature e-commerce to high-margin cloud ambitions, targeting 20 GW data center power and 1 trillion RMB cloud revenue by 2032.Despite high capex needs (200–300bn RMB/year), Alibaba's strong balance sheet, low valuation (PEG 0.61), and potential for margin normalization offer significant upside. maybefalse/iStock Unreleased via Getty Images

Investment Summary The stock price of Alibaba Group Holding Limited (BABA) is down 41% from its peak in 2025 as earnings recovery takes longer than expected and the CapEx expectations pile up. However, the company path

30 Followers

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

Alibaba has absorbed a brutal year of AI-fueled losses, a profit collapse, and a dilutive capital raise, yet it has somehow held up better than every major Chinese tech peer. Whether that relative strength signals a floor forming or a…

Heavy artificial intelligence (AI) spending has defined 2026 for Alibaba Group (NYSE:BABA | BABA Price Prediction), and the share price has absorbed the cost. Alibaba stock trades at $110.94, down 24% year to date. That decline raises a fair question: has the selling run its course, or is there more room to fall?

Meanwhile, Baidu (NASDAQ:BIDU) stock, a close comparison on AI investment, is at $85.25. That’s down 35% year to date, representing a steeper drop than Alibaba stock’s decline. Additionally, PDD Holdings (NASDAQ:PDD) stock is at $81.43, down 28% year to date, also worse than Alibaba.

To test whether the pressure belongs to Alibaba alone, two funds offer a useful benchmark for the year. The KraneShares CSI China Internet ETF (NYSEARCA:KWEB) is down 27% year to date. Over the same stretch, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 14% year to date.

A Profit Plunge, Then a Dilutive Raise In its results for the June 2026 quarter, Alibaba reported a 75% drop in profit as heavy AI spending ran through the numbers. Days later, Alibaba priced a share placement. It raised $10.2 billion and told investors it would put all of the net proceeds into expanding its AI capability and infrastructure.

The two events support each other. The quarter showed spending compressing earnings, and the placement committed the company to more of it while diluting existing holders. On the June-quarter call, management offered its own framing: “AI has become Alibaba’s most certain growth engine.”

Why Baidu and PDD Frame the Debate Alibaba runs Chinese e-commerce marketplaces alongside a cloud computing arm, and that unit is where the AI investment is going. In effect, the retail business generates the cash funding a capital-heavy infrastructure build.

Baidu is comparable on that score. As a search and cloud company making its own AI investment, it faces the same tension between spending now and earning later.

PDD is the e-commerce comparison, running marketplaces without an equivalent cloud infrastructure commitment, yet PDD stock has also fallen further this year than Alibaba stock, so the weakness reaches beyond the spending question.

Against the KWEB China internet fund’s decline and the overall market’s gain, the pressure looks sector-wide. Alibaba stock has held up better than its two peers and the sector fund this year. That relative strength is the core of the bottoming argument, though outperforming during a slide still leaves the share price lower.

Floor, or False Bottom? The bull case holds that the spending is calculated and funded, with a stated destination. A business investing through a weak stretch can post rough numbers before the returns show up, which differs from genuine trouble. On that reading, the smaller decline in Alibaba stock relative to its peers could signal a base forming.

Skeptics may see the same facts differently, and their concerns are concrete. Alibaba’s profit has already been cut sharply, its share count has grown, and nothing in the commitment suggests the spending stops soon. However, the year-to-date figures alone can’t settle how much of that risk the current price already reflects.

Whether Alibaba stock has found a floor remains open, and the evidence supports both the patient reading and the skeptical one. Investors can watch for whether Alibaba stock keeps outperforming the China internet fund as more AI spending flows through upcoming quarters. Anyone adding exposure should keep positions small until profit shows clear signs of recovering.

Contact [email protected] for any questions or corrections.

NEW YORK, Oct. 06, 2026 (GLOBE NEWSWIRE) -- SueWallSt alerts investors in Alibaba Group Holding Limited (NYSE: BABA) of a pending securities class action on behalf of purchasers of BABA securities between June 26, 2025 and June 24, 2026. Find out if you may qualify to recover losses. You may also contact Joseph E. Levi, Esq. at [email protected] or (888) SueWallSt.

BABA ADSs traded as high as $173.68 on October 9, 2025 and closed at $95.07 on June 25, 2026, a decline of $78.61 per ADS, or approximately 45.26%. To be considered for lead plaintiff, investors must file by October 5, 2026.

The Named Individual Defendant

The action names Alibaba Group Holding Limited and Eddie Yongming Wu, who served as Chief Executive Officer at all relevant times. Wu signed the SOX certifications attached to both the annual report on Form 20-F filed June 26, 2025 and the annual report on Form 20-F filed May 20, 2026, attesting to the accuracy of the Company's reporting, the disclosure of material changes to internal controls, and the disclosure of fraud.

Alleged Control Person Liability

The complaint charges that, as CEO, Wu controlled the content of Alibaba's SEC filings, reports, and public statements throughout the Class Period.Under Sections 302 and 906 of the Sarbanes-Oxley Act, the certifying officer personally attests to the accuracy and completeness of the covered filings.The pleading asserts that the June 26, 2025 filing described Alibaba's MIIT operating license requirement and separately warned that U.S. orders had targeted companies deemed controlled by the Chinese military, while allegedly omitting that the FY2025 NDAA's definition of "Chinese military company" reached entities affiliated with the MIIT.The May 20, 2026 filing allegedly framed "unauthorized distillation of third-party models" as a perceived, alleged, or inadvertent risk.As averred, that framing was misleading because an alleged large-scale adversarial distillation effort against Anthropic PBC's Claude model was then ongoing.Count II seeks control person liability against the Individual Defendant under Section 20(a) of the Exchange Act. Certification Obligations and Investor Harm

On June 8, 2026, the U.S. Department of Defense released an updated list of Chinese military companies that included Alibaba based on its affiliation with the MIIT. ADSs fell $4.69, or roughly 3.9%, over two trading days to close at $115.38 on June 10, 2026. On June 24, 2026, Bloomberg reported that Anthropic had accused Alibaba of illicitly accessing Claude through approximately 28.8 million exchanges and nearly 25,000 fraudulent accounts. ADSs fell $2.80, or 2.7%, to $99.80, then a further $4.73, or 4.7%, to $95.07 on June 25, 2026.

"Corporate officers have a duty to ensure their companies' public statements are accurate and complete. Here, the complaint alleges that the certifying officer attested to filings that described unauthorized distillation of third-party AI models as a hypothetical concern while such conduct was allegedly already underway." -- Joseph E. Levi, Esq.

Submit your information here or call (888) SueWallSt.

WHY SUEWALLST: SueWallSt is powered by Levi & Korsinsky LLP. Levi & Korsinsky LLP has established itself as a nationally-recognized securities litigation firm that has secured hundreds of millions of dollars for aggrieved shareholders and built a track record of winning high-stakes cases. The firm has extensive expertise representing investors in complex securities litigation and a team of over 70 employees to serve our clients. For seven years in a row, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report as one of the top securities litigation firms in the United States.

Frequently Asked Questions About the BABA Lawsuit

Q: Who are the defendants named in the BABA lawsuit? A: The complaint names Alibaba Group Holding Limited and Chief Executive Officer Eddie Yongming Wu, who signed the Sarbanes-Oxley certifications attached to the Company's annual reports on Form 20-F during the Class Period.

Q: What specific misstatements does the BABA lawsuit allege? A: The complaint alleges Alibaba made materially false or misleading statements regarding its status as a "Chinese military company" under the FY2025 NDAA due to its MIIT affiliation, and regarding whether unauthorized distillation of third-party AI models was merely a hypothetical risk. When these matters were disclosed, the ADS price declined.

Q: What court was the BABA class action filed in? A: The case was filed in the United States District Court for the Southern District of New York, governed by the Private Securities Litigation Reform Act of 1995.

Q: What is a lead plaintiff and why does it matter? A: A lead plaintiff is the investor appointed by the court to represent the entire class. Lead plaintiffs are typically investors with the largest documented losses. Being appointed does not increase individual recovery but gives direct oversight of how the case is run.

Q: What do BABA investors need to do right now? A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at [email protected] or (212) 363-7500. No immediate action is required to remain eligible as an absent class member.

Q: What if I already sold my BABA shares -- can I still recover losses? A: Yes. Eligibility is based on when you purchased, not whether you still hold the shares. Investors who bought during the Class Period and sold at a loss may still be eligible to participate.

Q: What does it cost me to participate? A: There is no upfront cost to contact the firm. Securities class actions are generally handled on a pure contingency basis. No upfront fees, no retainer, and no out-of-pocket costs. Any attorneys' fees and expenses awarded to class counsel are subject to court approval.

Q: What if I live outside the United States? A: U.S. securities class actions generally cover purchases on U.S. exchanges regardless of the investor's country of residence.

CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
33 Whitehall Street, 27th Floor
New York, NY 10004
[email protected]
Tel: (888) SueWallSt
Fax: (212) 363-7171

Attorney Advertising. Prior results do not guarantee similar outcomes.

Key Takeaways Alibaba Cloud's AI and compute revenues surged 45%, while segment-adjusted EBITA jumped 133%.International E-commerce revenues fell 1% as tariffs and geopolitical pressure weighed on sales.Alibaba's capex rose 75%, driving a RMB44.7 billion free cash outflow and compressing margins. Alibaba Group (BABA - Free Report) is doubling down on cloud and AI to reignite growth, but the payoff remains uneven. At its Apsara Conference, Alibaba Cloud targeted more than 20 gigawatts of global data center capacity by 2032, lined up new regions in Türkiye, Finland and the Netherlands and unveiled the Zhenwu V900 chip, due in early 2027. In commerce, AliExpress turned an operating profit in the first quarter of fiscal 2027 on logistics optimization and cost efficiencies.

The cloud momentum is real. AI Cloud and Compute Services revenues jumped 45% year over year to RMB48.4 billion, with AI-related product revenues of RMB12.4 billion posting a 12th straight quarter of triple-digit growth. Segment adjusted EBITA surged 133% to RMB5.6 billion. International momentum is weaker. International E-commerce revenues slipped 1% to RMB27.8 billion amid tariff and geopolitical pressure, so profitability gains are not yet lifting sales.

The AI push is costly. Capital expenditure climbed 75% to RMB67.7 billion, driving a free cash outflow of RMB44.7 billion versus RMB18.8 billion a year ago. Group adjusted EBITA fell 30%, with margin compressing to 10% from 16%, as AI Labs and Applications losses widened to RMB13.9 billion from RMB3.2 billion. Net income plunged 75%.

Guidance offers only partial comfort. Management expects cloud growth to keep accelerating and margins to expand, with model-as-a-service annual recurring revenues topping RMB16 billion in August against a year-end target of RMB30 billion. Alibaba also targets RMB100 billion in external cloud revenues by 2030. Yet spending shows no sign of easing. RMB190 billion of the three-year RMB380 billion capex plan is already deployed, and quick commerce is not expected to turn profitable until fiscal 2029.

Until cash flow stabilizes and international revenues return to growth, cloud strength alone may not be enough to lift BABA stock meaningfully.

How AMZN & MSFT Compare on Cloud Growth and SpendingAmazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) are pursuing similar AI-led cloud expansion. Amazon's AWS segment sales rose 37% year over year to $42.2 billion in the second quarter of 2026, its fastest growth in 18 quarters, while operating income climbed 64% to $16.6 billion. However, Amazon's trailing 12-month capital expenditure rose 64% to $169 billion, turning free cash flow negative. Microsoft's Azure and other cloud services revenues grew 43% in the fourth quarter of fiscal 2026, with commercial remaining performance obligation jumping 84% to $678 billion. Microsoft invested $35.8 billion in property and equipment during the June quarter.

BABA’s Share Price Performance, Valuation & EstimatesBABA shares have plunged 25.8% year to date, underperforming the Zacks Internet – Commerce industry’s 1.6% decline and the Zacks Retail-Wholesale sector’s 3.8% decline.

BABA’s YTD Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, BABA stock is currently trading at a trailing 12-month Price/Earnings ratio of 47.7X compared with the sector’s 27X. BABA has a Value Score of C.

BABA’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 EPS is pegged at $6.41, reflecting a 1.7% downward revision over the past 30 days.

Key Takeaways Alibaba is expanding across Qwen models, proprietary chips, cloud infrastructure and overseas AI markets.AI-related products have posted triple-digit year-over-year growth for 12 straight quarters.Alibaba has spent about RMB190B of its RMB380B three-year plan, keeping free cash flow under pressure. Alibaba Group (BABA - Free Report) is building a much bigger AI story than simply developing another large language model. The company is expanding across the AI stack, from its Qwen models and proprietary chips to cloud infrastructure and overseas markets.

Its latest developments suggest that management is preparing for a much larger role in the global AI race. But with that ambition comes significant investment and execution risk. So, are these developments enough to make BABA stock more attractive after fiscal first-quarter 2027 earnings?

Qwen Is Becoming a Bigger AI AssetAlibaba’s Qwen family remains at the center of its AI strategy. The company is already working on Qwen 4, while future versions like Qwen 5 are designed to scale up to 10 trillion parameters.

Alibaba is also experimenting with recursive self-improvement (RSI), allowing its models to repeatedly refine aspects of their own development. Qwen 3.8-Max model has gone through 33 rounds of RSI, with each cycle allowing the system to improve the model further.

Alibaba’s New AI ChipAlibaba is also moving deeper into AI infrastructure. Its Zhenwu V900 accelerator is expected to enter commercial use in 2027. Alibaba unveiled the chip yesterday, calling it China’s most powerful AI accelerator as it seeks to strengthen its position in the AI chip market. That matters because Alibaba wants to control more of the AI stack rather than relying entirely on external suppliers.

Alibaba Cloud Takes Its AI Push GlobalPer South China Morning Post, Alibaba Cloud is expanding its international footprint, with new data centers planned in Turkey, Finland and the Netherlands. Additional capacity is coming to several existing markets, including Malaysia, Germany, the UAE, France and Hong Kong. This expansion will further broaden Alibaba Cloud’s international footprint as it looks to support rising demand for AI services outside China. The company currently operates 107 availability zones across 31 regions.

According to Gartner, BABA was the world’s fourth-largest cloud IaaS provider by revenues in 2025, behind Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Google. Alibaba was the largest cloud IaaS provider in Asia-Pacific, with a 22.5% regional market share.

The company is also expanding its overseas AI product portfolio. Its new tools allow businesses to offer AI services under their own brands, combine multiple models for specific applications and create videos lasting up to an hour in more than 20 languages. Alibaba Cloud is also building partnerships to support its international expansion. Recent collaborations span sectors such as digital entertainment, logistics and enterprise software, giving Alibaba additional channels to bring its technology to businesses outside China.

The overseas push comes at a time when Alibaba Cloud is already seeing strong demand. External cloud revenue growth hit its highest level in several years, while AI-related products have maintained triple-digit year-over-year growth for 12 straight quarters. AI now accounts for more than one-third of Alibaba Cloud’s external revenues. Alibaba is targeting more than 20 GW of global data-center capacity by 2032, underscoring the scale of its ambition.

BABA’s Capex WoesAlibaba’s AI ambitions require a significant upfront commitment. The company is already working through a RMB380 billion, three-year investment plan, with about RMB190 billion spent by the June quarter. A large portion of the spending is going toward AI infrastructure, including data centers and computing capacity, which means free cash flow is likely to remain under pressure as Alibaba continues expanding.

Our TakeAlibaba is clearly building a broader and more integrated AI ecosystem, with Qwen, chips, cloud infrastructure and international expansion reinforcing one another. Strong AI demand could create a meaningful long-term growth opportunity.

The Zacks Consensus Estimate for BABA’s fiscal 2027 and 2028 EPS implies year-over-year growth of roughly 67% and 40%, respectively.

Image Source: Zacks Investment Research

Still, the scale of investment, uncertain timing of returns and ongoing profitability pressures leave room for execution risk. For now, BABA remains a Zacks Rank #3 (Hold) stock as investors weigh its significant AI opportunity against the capital intensity and time required to realize it.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Alibaba's cloud and AI businesses are accelerating, with AI revenues topping a third of cloud sales.Core commerce remains resilient, helping fund Alibaba's AI ambitions as quick commerce losses narrow.Alibaba is pursuing a defined AI infrastructure payback plan despite near-term pressure on cash flow. Alibaba Group (BABA - Free Report) continues to trade at a premium price-to-sales multiple relative to its sector, a valuation gap that has left investors debating whether the stock still deserves a place in growth portfolios or whether a better entry point lies ahead. BABA is currently trading at a forward 12-month price-to-sales ratio of 1.64, above the Zacks Retail-Wholesale sector’s average of 1.42. The company carries a Value Score of C.

Rather than chasing the stock at current levels or exiting altogether, the more balanced approach for existing shareholders is to hold, anchored not in near-term price action but in the structural shifts underway across Alibaba's cloud, e-commerce and AI businesses. Three fundamental threads support this stance.

BABA’s Premium P/S Valuation
Image Source: Zacks Investment Research

Cloud and AI Commercialization Is Accelerating, Not SlowingAlibaba's cloud segment has moved from a promising growth story to a demonstrably accelerating one. External cloud revenue growth reached a multi-year high in the June quarter, with AI-related product revenues sustaining triple-digit year-over-year growth for 12 consecutive quarters and now representing more than a third of external cloud revenues. This is not incidental growth; it reflects deepening enterprise adoption of Alibaba's Model-as-a-Service platform and proprietary chip stack. Holding through the current investment cycle allows shareholders to participate in this compounding monetization curve rather than stepping aside just as scale economics begin to show through in margins.

Core Commerce Remains a Cash Engine as Quick Commerce GrowsWhile quick commerce investment continues to weigh on near-term profitability, Alibaba's e-commerce base is not deteriorating; it is being reorganized to capture new consumption patterns. Customer management revenue growth has held up on a like-for-like basis, and the newly consolidated e-commerce structure is designed to extract synergies across domestic and cross-border platforms rather than let them compete for the same resources. This underlying resilience in the core commerce engine gives the company the cash generation capacity to fund its AI ambitions without relying solely on external capital, a fundamental stabilizer that supports a hold rather than an exit.

Disciplined Long-Term Capital Allocation Toward AI InfrastructureElevated capital expenditure has compressed free cash flow and near-term earnings, but management has framed this spending within a defined multi-year AI infrastructure plan rather than open-ended outlays. The company has articulated a payback framework for AI-related capex based on current gross margins, with potential for that payback period to shorten as proprietary chip penetration increases and pricing power strengthens. This structured approach to reinvestment, rather than reactive spending, is a fundamental reason long-term holders can tolerate near-term margin pressure.

BABA’s Cloud, E-Commerce and AI DevelopmentsAcross its reporting segments, recent company disclosures point to broadening momentum. In cloud and AI, Alibaba used its September 2026 Apsara Conference to outline its next-generation Qwen roadmap, confirming that its upcoming Qwen 4 model is already in training, with future Qwen 4.5 and Qwen 5 versions projected to scale toward 5-10 trillion parameters. The event also introduced a new proprietary AI chip alongside an agentic cloud architecture and a mobile AI agent platform, reinforcing the company's full-stack ambitions from chips to applications. In e-commerce, Alibaba has continued integrating Taobao Instant Commerce more tightly with its broader ecosystem, including its Qwen app, while its restructured China E-commerce Group works to unify Taobao, Tmall and international platforms such as AliExpress, Trendyol and Lazada under a shared consumption framework. On the AI applications front, the company released an updated open-weight image-generation model in September 2026, aimed at commercial design and e-commerce marketing use cases, extending its AI tools deeper into merchant workflows.

BABA’s Forward Guidance and Capital SpendingFor its first-quarter fiscal 2027, Alibaba reported sharply higher capital expenditure year over year as it continues drawing down a previously announced three-year AI infrastructure investment plan, with a meaningful portion of that multi-year budget already deployed. Management guided that cloud revenue growth is expected to keep accelerating in coming quarters, with EBITDA margins expanding sequentially, and reiterated a longer-term ambition of a much larger external cloud revenue base with materially higher margins by decade's end. Quick commerce losses are expected to keep narrowing, with a path to overall profitability targeted in the coming fiscal years, while its Model-as-a-Service annualized revenue run rate is targeted to roughly double by fiscal year-end.

The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $6.87 per share, implying 76.61% year-over-year growth, a key core reason holding through this pullback still carries fundamental merit.

BABA's Share Price Performance and Competitive LandscapeBABA shares have plunged 18.6% year to date, underperforming the Zacks Internet – Commerce industry's 3.4% growth and the Retail-Wholesale sector's 1.4% decline, reflecting broad risk-off sentiment toward Chinese technology equities generally this year.

Competitively, Alibaba Cloud battles Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) -owned Google for enterprise AI workloads; Amazon's AWS and Microsoft's Azure still command greater global hyperscale share, while Google keeps expanding AI-native infrastructure, so pricing pressure stays elevated as Alibaba, Amazon, Microsoft and Google all pour heavy capital into compute capacity, and this scale gap is one reason to hold rather than chase shares higher right now.

BABA’s Year-to-date performance
Image Source: Zacks Investment Research

ConclusionAlibaba's premium price-to-sales ratio reflects the market's recognition of a business in the middle of a genuine transformation, not merely a legacy e-commerce operator carrying a rich multiple. The fundamental case for holding rests on accelerating cloud and AI monetization, a core commerce base stable enough to self-fund that transformation, and a capital allocation framework built around a defined payback horizon rather than unchecked spending. None of this eliminates near-term risk. Heavy capital expenditure will keep pressuring free cash flow, and quick commerce profitability will take meaningful time to fully materialize across the entire business. But for investors who already own the stock, these fundamental drivers are reasons to stay patient through the investment cycle rather than reasons to sell now.

New investors weighing a fresh entry may still prefer to wait for the current spending cycle to show a clearer margin payoff before committing, but existing shareholders have sufficient fundamental support to hold Alibaba stock through this phase rather than exit prematurely today. Alibaba currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Microsoft pairs 43% Azure growth with broad AI adoption across Copilot and enterprise software.Alibaba Cloud grew 45%, with AI revenues up triple digits for 12 straight quarters and 35% of cloud sales.Microsoft faces rising AI capital spending, while Alibaba balances cloud gains against weaker commerce trends. Microsoft Corporation (MSFT - Free Report) and Alibaba Group (BABA - Free Report) sit at opposite ends of the globe but on the same technological frontier. Both companies have reshaped themselves into AI-first cloud operators, pouring record capital into new data centers, custom silicon and large language models to capture surging worldwide demand for generative AI tools and services today.

The commonality runs deeper than spending alone. Azure and Alibaba Cloud are both posting accelerating growth after years of steadier, single-digit expansion, and both companies have noted that customer demand for AI compute now exceeds available supply. Yet their stocks have moved in starkly different directions this year, making this an opportune moment to weigh the two names against each other.

Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for MSFT StockMicrosoft's fourth-quarter fiscal 2026 results underscored the strength of its cloud-AI flywheel. Azure revenues grew 43% year over year, with management noting that customer demand continues to exceed available capacity, a rare position of pricing power in enterprise cloud computing today. Microsoft Cloud crossed $214 billion in annual revenues, up 27%, while full-year operating income rose 21%, outpacing revenue growth even amid heavy AI infrastructure investment and rising depreciation charges tied to new data center capacity coming online.

Beyond the headline numbers, Microsoft's product ecosystem gives it a durable moat. Microsoft 365 Copilot has surpassed 30 million paid seats, and GitHub Copilot has reached 50 million users, embedding AI directly into daily workflows enterprises already depend on. September's Azure platform updates, including expanded Azure AI Foundry model access, new Cobalt-based virtual machines and agentic Container Apps Sandboxes, extend this lead further into agentic AI, a category management has called its next major growth vector.

For fiscal 2027, Microsoft guided to continued double-digit revenue and operating income growth, with Azure growth of roughly 45% expected in constant currency and Intelligent Cloud revenues guided meaningfully higher still. Broad diversification across productivity software, gaming, cybersecurity and cloud infrastructure cushions Microsoft from the single-segment shocks that more concentrated cloud peers face. The main challenge is capital intensity: fiscal 2027 capital expenditure is guided higher again, pressuring near-term free cash flow and operating margins, even as management points to improving silicon efficiency and better infrastructure design as long-term offsets to that rising spending curve ahead.

The Zacks Consensus Estimate for Microsoft's fiscal 2026 earnings is pegged at $19.62 per share, indicating 9.3% growth.

The Case for BABA StockAlibaba's first-quarter fiscal 2027 results showed real cloud momentum building. Alibaba Cloud's external revenues grew 45% year over year, and the segment’s EBITDA margin rose to between 11.6% and 12%, reflecting improved economies of scale and firmer pricing in a supply-constrained market. AI-related product revenues have posted triple-digit growth for 12 consecutive quarters and now account for roughly 35% of external cloud revenues, with management reiterating its longer-term ambition of reaching $100 billion in external cloud revenues by 2030.

Alibaba's AI stack has also advanced meaningfully in recent months. The company's Qwen3.8-Max model, built on 2.4 trillion parameters, ranks among the most capable Chinese-developed systems, and Alibaba Cloud has cut hyperscale AI data center delivery time to roughly 100 days to speed global capacity expansion. Proprietary T-Head chips, including the Zhenwu supernode line, are gaining commercial traction across hundreds of external customers, reducing reliance on external suppliers amid export restrictions.

These gains come with real trade-offs. Group-level revenue growth remains modest at 9% year over year, customer management revenues in the core commerce business declined, and heavy AI infrastructure spending has pressured free cash flow and near-term profitability, with adjusted EBITDA falling year over year. Quick commerce investment, while driving 45% revenue growth in that segment, adds another capital-intensive front to fund. Alibaba's guidance points to accelerating cloud and AI revenue growth alongside gradual margin improvement, but execution still depends on sustaining compute supply growth and navigating a more competitive, less predictable regulatory and geopolitical backdrop than Microsoft currently faces.

The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $6.51 per share, implying 67.35% year-over-year growth.

Valuation and Price Performance ComparisonBoth Microsoft and Alibaba trade at premium valuations, though the extent of that premium differs significantly. BABA trades at a forward 12-month P/E of 14.62X, while MSFT commands a steeper 24.15X multiple. Investors may still want to track MSFT despite its higher premium, since that multiple reflects broader, more diversified AI-driven earnings growth.

MSFT vs. BABA: P/E F12M Valuation
Image Source: Zacks Investment Research

On price performance, shares of BABA have plunged 22.7% year to date, while MSFT shares have returned a modest 2.1%. MSFT's modest year-to-date gain also reflects steadier execution and demand visibility, while BABA's decline reflects lingering uncertainty around its margin recovery and core commerce trends ahead.

MSFT Outperforms BABA YTD
Image Source: Zacks Investment Research

ConclusionMicrosoft's edge over Alibaba rests on broader diversification, consistent double-digit cloud growth, expanding operating margins, and a maturing AI monetization engine spanning Copilot, Azure and enterprise software. Alibaba offers faster headline cloud growth and improving AI unit economics, but softer core commerce trends, thinner group-level growth, and heavier near-term cash burn add uncertainty to its outlook. Weighing revenue durability, margin trajectory, ecosystem breadth and guidance visibility together, Microsoft holds the stronger upside potential of the two stocks right now. Investors may consider tracking Microsoft stock and holding current positions, while waiting for a better entry point before adding Alibaba shares. Microsoft and Alibaba currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A rapidly growing cloud business now faces allegations that could affect access, customers and future regulation. Summary

Alibaba’s AI acceleration is becoming entangled with the next U.S.–China technology dispute.

Alibaba Group BABA, China's e-commerce, cloud and artificial-intelligence powerhouse, was named among six Chinese companies accused by U.S. officials of improperly distilling American AI models. Its U.S.-listed shares fell approximately 0.4% to $108.93 Thursday morning.

The dispute centers on whether Chinese developers used outputs from American AI systems to train competing models faster and more cheaply. Beijing dismissed the allegations as unsupported by facts or law, arguing that distillation is a neutral industry practice and warning against using the claims to constrain Chinese companies. No court has ruled on the accusations.

Alibaba's latest quarter delivered 48.4 billion yuan in AI-cloud and computing revenue, up 45%, while capital expenditures reached 67.7 billion yuan—roughly 140% of that quarterly revenue. The picture adds a valuation twist: the stock trades 9.03% below its GF Value estimate of $119.74. That discount looks tempting, but escalating technology restrictions, compliance costs and customer caution could delay the payoff from Alibaba's aggressive AI spending.

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

Click for the complete disclosure

Instant delivery changed consumer behavior; now Alibaba must prove warehouses can replace subsidies with returns. Summary

Faster shopping created demand before it created dependable profit.

Alibaba Group BABA, the Chinese commerce, cloud and artificial-intelligence giant, entered a tougher chapter in China's instant-retail war. After a year of coupons and delivery subsidies, the fight is shifting from winning orders to making those orders profitable. Reuters estimates the market could reach 1.2 trillion yuan, or roughly $178 billion, by year-end.

The battlefield is also getting bigger. Alibaba and its rivals are pushing beyond restaurant meals into electronics, medicine, flowers and other higher-margin products promised within an hour. That expansion demands automated warehouses, denser fulfillment networks and disciplined spending—especially after regulators reined in the industry's most aggressive promotions.

Alibaba traded at $111.135 on Sept. 3, sitting 6.88% below its GF Value estimate of $119.35 and implying roughly 7.4% upside if the shares reach that benchmark. But valuation is only part of the story. Alibaba's June-quarter release does not isolate instant-retail profitability, leaving investors with one decisive question: can higher order density and repeat purchases turn subsidy-driven demand into durable earnings?

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

Click for the complete disclosure

Alibaba (BABA +2.23%) is changing.

For years, investors knew the company primarily as China's e-commerce giant, with Taobao and Tmall at the center of its business. But Alibaba is now pouring billions of dollars into artificial intelligence (AI), building cloud infrastructure, developing its own AI models, and even investing in AI chips.

The transformation is starting to show up in the numbers.

In its fiscal 2027 first quarter, which ended June 30, Alibaba's AI cloud and compute services revenue jumped 45% year over year to 48.4 billion yuan (about $7.2 billion). But there's a catch: Capital spending surged 75% to 67.7 billion yuan ($10.1 billion), pushing free cash flow into negative territory.

So, is Alibaba a buy now? Investors should focus on one major green flag and one red flag.

Image source: Getty Images.

Green flag: AI is becoming a real business For years, Alibaba's AI ambitions were mostly a promise.

The company had Qwen, its family of large language models. It had Alibaba Cloud. And it had ambitious plans to invest heavily in AI infrastructure. But investors still needed proof that businesses would actually pay for these services.

That proof is beginning to emerge. Alibaba's AI cloud and compute services revenue grew 45% year over year in the latest quarter. That's impressive growth for a business already generating billions of dollars in quarterly revenue. Even more encouraging, adjusted earnings before interest, taxes, and amortization (EBITA) for the segment jumped 133%.

In simple terms, Alibaba isn't just getting more customers to use its AI services. It's also starting to make more money from the AI business as it grows.

That's important because cloud computing can become more profitable as infrastructure gets used more efficiently. Once the expensive data centers and computing systems are in place, additional revenue can flow through at higher margins -- an effect enabled by operating leverage.

Alibaba is also building an ecosystem around Qwen, its AI model family. Developers can use Qwen to build their own applications, while Alibaba provides the computing power and software tools needed to run them.

Think of it this way: Qwen attracts developers. Alibaba AI Cloud provides the infrastructure. If that flywheel continues to work, Alibaba could build a much larger and more valuable cloud business over time.

And there are already signs that this is happening. Alibaba said AI-related product revenue has grown at triple-digit percentage rates for 12 consecutive quarters, while Alibaba Cloud ranked first in China's AI cloud market, with a 38.1% market share.

For investors, this is the most encouraging part of Alibaba's transformation. AI is no longer just an investment story. It's starting to become a profit story.

Premium Feature

Moneyball Superscore

61/100

Today's Change

(

2.23

%) $

2.59

Current Price

$

118.90

Red flag: The AI opportunity doesn't come cheap Here's the problem.

Alibaba is spending an enormous amount of money in pursuit of the AI opportunity.

Capital expenditures jumped 75% year over year to 68 billion yuan ($10.1 billion) in the latest quarter, and free cash flow turned negative. In other words, Alibaba is spending heavily today in the hope of generating much larger returns tomorrow.

While the conglomerate has historically relied on profits from its flagship e-commerce business to fund these investments, it may eventually turn to external funds for two reasons.

First, the e-commerce business itself is burning huge amounts of profits to expand into the instant commerce segment. While there are signs that this investment period is nearing its end, as evidenced by the recovery in its EBITA, there is no guarantee that Alibaba won't ramp it back up in the future.

Second, Alibaba has committed to spending approximately 380 billion yuan on AI and cloud infrastructure through 2029. So, while its capital expenditures have been high recently, they could grow further in the coming quarters.

In fact, Alibaba just announced a new share placement worth 80 billion yuan, saying that it would invest the money from that stock sale in AI. This suggests that more such secondary stock sales could take place in the future.

That creates important questions for investors: Will the returns from its AI businesses justify the billions Alibaba is spending to build them? And how much more equity dilution will take place along the way?

What does it mean for investors? Alibaba's latest quarterly results paint a picture that features a fascinating combination of promise and risk for investors.

The green flag is increasingly clear: AI is driving rapid growth in Alibaba Cloud, and the business is beginning to show operating leverage. The red flag is equally clear: Capturing that growth requires enormous investments, which put pressure on cash flow and lead to equity dilution.

That's why the company is at a critical juncture. If Alibaba can turn today's 45% AI-cloud growth into a large, recurring, and profitable business, today's spending could look like a bargain in hindsight. If it can't, investors could discover that building an AI empire is much easier than earning an attractive return from it.

The former premise may make its stock a great buy today, while the latter raises important question marks. Investors should weigh both the upside and the downside before making a decision about buying Alibaba stock.

China’s Alibaba on Sunday launched a HK$80-billion ($10.2 billion) share placement to fund artificial intelligence-related development.

A deal by the Chinese e-commerce and cloud computing giant would mark the largest-ever primary follow-on offering by a Hong Kong-listed company.

It would rank as the world’s third-largest primary follow-on share sale this year after offerings from Alphabet and Intel.

Alibaba has said it intends to use 100% of the net proceeds from the placement to invest in its “full stack” AI capabilities. SOPA Images/LightRocket via Getty Images The company said it intends to use 100% of the net proceeds from the placement to invest in its “full stack” AI capabilities, a category that includes chips, infrastructure and the development and deployment of AI models.

A term sheet reviewed by Reuters showed Alibaba planned to sell 710 million ordinary shares at HK$112.70 a share. That represented a 3.6% discount to its most recent closing price.

In its announcement for the $10.2 billion share placement, Alibaba did not disclose additional details on its investment plans by category of its planned AI-related investment.

It did not comment beyond its regulatory disclosure.

Last week, Alibaba reported its results for the April-to-June quarter, saying it had already spent nearly half of its three-year capex investment plan. It said its expected payback on AI-related investments was on track to fall to 2.5 years from three years, driven by surging demand.

Alibaba’s net profit for the quarter fell 75% from a year earlier as it ramped up its AI-related capital expenditures.

“In order to be able to capture that future growth, we first need to make these ​capex investments to build out the necessary compute capacity,” CEO Eddie Wu said on an earnings call.

Alibaba’s HK$80-billion share placement would mark the largest-ever primary follow-on offering by a Hong Kong-listed company. Bloomberg via Getty Images The company’s share offering has been met with strong demand from investors, including sovereign wealth funds, two people familiar with the deal told Reuters. They could not be named because the information was not public.

Alibaba increased the size of the offering after the deal was oversubscribed, the people familiar with the matter said.

Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners of the Alibaba offering, said one of the sources and a third person with knowledge of the matter. The banks did not immediately respond to a Reuters request for comment.

The share placement was not registered under US securities laws as an offshore transaction, meaning American investors were not eligible to participate, Alibaba said.

Since 2022, the global AI boom has fueled staggering capital outlays on infrastructure and data centers, including in the U.S. and China.

The four major U.S. hyperscalers – Microsoft, Amazon, Alphabet and Meta – together are expected to spend roughly $725 billion in capital expenditures in 2026, much of it tied to AI data centers, chips and cloud infrastructure.

Alibaba Group Holding Ltd. (NYSE:BABA) reported mixed results for its first quarter on Thursday.

Alibaba reported fiscal first-quarter 2027 revenue of $39.64 billion, up 9% year over year and above the $38.63 billion analyst estimate. However, adjusted earnings per ADS fell 42% to $1.26, missing expectations of $1.85. Adjusted net income declined 38% to $3.05 billion, while adjusted EBITA fell 30% to $4.03 billion. Net income plunged 75% to $1.54 billion.

“We delivered a strong quarter, driven by the improving commercialization of our full‑stack AI capabilities,” said Eddie Wu, Chief Executive Officer of Alibaba Group. “Alibaba Cloud’s external revenue growth accelerated to 45%, with AI-related product revenue delivering triple-digit growth for the twelfth consecutive quarter. We recently launched frontier language, coding, video, audio, image and music models, all delivering top-tier performance. We introduced QwenWork, an AI workforce agent that unleashes enterprise productivity and capabilities. With our full‑stack AI strategy, we have put Alibaba in a superior position to capture the substantial growth of demand for artificial intelligence and AI compute.”

Alibaba shares dipped 8.4% to trade at $119.62 on Friday.

These analysts made changes to their price targets on Alibaba following earnings announcement.

Baird analyst Colin Sebastian maintained the stock with an Outperform rating and lowered the price target from $164 to $160. Barclays analyst Jiong Shao maintained the stock with an Overweight rating and raised the price target from $195 to $200. JP Morgan analyst Alex Yao maintained the stock with an Overweight rating and raised the price target from $205 to $210. Considering buying BABA stock? Here’s what analysts think:

Photo via Shutterstock

Trending

Get a 1% Match on Your First Deposit of $1,000+

Market News and Data brought to you by Benzinga APIs

© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

To add Benzinga News as your preferred source on Google, click here.

Alibaba Group Holding Limited (BABA) Q1 2027 Earnings Call August 20, 2026 7:30 AM EDT

Company Participants

Lydia Lu - Head of Investor Relations
Yongming Wu - CEO, Head of Core E-Commerce Business & Director
Toby Xu - Chief Financial Officer

Conference Call Participants

Alicis a Yap - Citigroup Inc., Research Division
Charlene Liu - HSBC Global Investment Research
Yang Bai - China International Capital Corporation Limited, Research Division
Yuan Liao - Citic Securities Co., Ltd., Research Division
Alex Yao - JPMorgan Chase & Co, Research Division

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's June Quarter 2026 Results Conference Call. [Operator Instructions].

I would now like to turn the call over to Lydia Lu, Head of Investor Relations of Alibaba Group. Please go ahead.

Lydia Lu
Head of Investor Relations

Thank you. Good day, everyone, and welcome to Alibaba Group's June Quarter 2026 Earnings Conference Call. Joining the call today are Joe Tsai, Chairman; Eddie Wu, Chief Executive Officer; Toby Xu, Chief Financial Officer; Jiang Fan, Chief Executive Officer of Alibaba E-commerce Business Group.

Before we get started, I would like to remind you that today's discussion may contain forward-looking statements based on management's current expectations that are subject to risks and uncertainties. We also make reference to non-GAAP financial measures. Reconciliations between GAAP and non-GAAP measures are included in today's earnings press release and investor presentation. Our comments will be on year-over-year comparisons unless we state otherwise. A replay of the call will be available on our website later today.

With that, I would like to turn the call over to Eddie.

Yongming Wu
CEO, Head of Core E-Commerce Business & Director

Good evening, good morning, and welcome to Alibaba Group's Earnings Call for the First Quarter of Fiscal Year 2027. Over the past quarter, Alibaba's strategic AI

Key Takeaways Alibaba is using quick commerce to deepen engagement across Taobao, Tmall and Freshippo.Broader categories are expanding quick commerce beyond food into fresh produce, healthcare and supermarkets.Better fulfillment efficiency and order mix are improving unit economics as Alibaba continues investing. Alibaba Group (BABA - Free Report) is positioning quick commerce as an important growth lever for its China e-commerce business. The model is expanding beyond food delivery into categories such as fresh produce, healthcare and supermarket products. This is broadening the use cases for Alibaba's e-commerce ecosystem, spanning Taobao, Tmall and Freshippo, and is helping drive stronger consumer engagement.

Quick commerce is creating tighter links with Alibaba's core e-commerce platforms. Faster fulfillment is allowing consumers to purchase a wider range of products for immediate needs, increasing transaction opportunities across Taobao and Tmall. In the fourth quarter of fiscal 2026, quick commerce revenues grew 57% to RMB 20 billion, underscoring the pace at which the format is scaling. Over the same period, China E-commerce Group revenues rose 6% to RMB 122 billion, with customer management revenue up 8% on a like-for-like basis, pointing to the broader engagement benefits management is citing from quick commerce, including accelerated growth at Freshippo and Tmall Supermarket.

The economics of quick commerce are also improving. Order mix optimization and better fulfillment efficiency are helping raise unit economics, with average order value increasing sequentially as the business scales. This matters because Alibaba is still investing heavily in the segment. Improving unit economics should gradually reduce the drag on China e-commerce profitability.

Scale is becoming another growth driver. Quick commerce order volume reached 2.7 times the level of the same quarter last year, with non-food orders expanding three times, allowing Alibaba to deepen its presence in higher-frequency purchases while generating additional traffic across Taobao, Tmall and Freshippo. As quick commerce continues scaling and its unit economics keep improving, the business is becoming better positioned to support Alibaba's e-commerce growth going forward.

How BABA is Placed Against PeersAlibaba's quick commerce push is unfolding alongside JD.com (JD - Free Report) and Amazon (AMZN - Free Report) , both of which are expanding fast delivery to capture higher-frequency demand. JD.com is scaling instant delivery through its owned logistics network across China, while Amazon is investing in same-day delivery infrastructure to strengthen its quick commerce reach globally. Compared with JD.com and Amazon, Alibaba is differentiating itself through deeper integration with Taobao, Tmall, and Freshippo, aiming to convert quick-commerce traffic into broader marketplace engagement. As JD.com, Amazon and Alibaba all pursue unit economics improvement in quick commerce, execution speed and category expansion are likely to determine relative positioning in this space.

BABA’s Share Price Performance, Valuation & EstimatesBABA shares have plunged 12% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s appreciation of 6.1% and 3.9%, respectively.

BABA’s YTD Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, BABA is currently trading at a forward 12-month price-to-earnings ratio of 16.28X, below the sector’s average of 22.48X. The company carries a Value Score of C.

BABA’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $6.87 per share, implying 76.61% year-over-year growth.

Alibaba currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

China's Alibaba (9988.HK), on Thursday reported a 9% rise in quarterly ​revenue, as strong demand for AI services ‌fueled growth in its cloud business, while an extended "618" shopping festival boosted its core e-commerce ​unit.

As businesses increasingly deploy artificial intelligence ​applications, demand for the cloud computing power ⁠needed to train and run those ​systems has surged, benefiting China's largest technology companies.

Alibaba, ​the country's biggest cloud services provider, has stepped up investment in AI infrastructure, proprietary models and ​applications, positioning the technology as a key ​growth driver for its cloud and consumer businesses.

The company's ‌AI ⁠cloud and compute services revenue rose 45% to 48.44 billion yuan in the quarter.

Alibaba's capital expenditures rose 75% to 67.68 ​billion yuan in ​the ⁠quarter ended June 30, as it continued to invest in AI ​infrastructure to meet strong customer demand.

The ​company ⁠reported revenue of 268.95 billion yuan ($40.02 billion) in the first quarter, compared with analysts' average estimate of 268.88 ⁠billion ​yuan, according to data ​compiled by LSEG.

($1 = 6.7207 Chinese yuan renminbi)

People visit an Alibaba booth during the World Artificial Intelligence Conference in Shanghai, China July 26, 2025. REUTERS/Go Nakamura/File Photo Purchase Licensing Rights, opens new tab

SummaryCompaniesDeal comes as Alibaba focuses resources on AI and cloud computingInternal memo says Trustar Capital will acquire Alibaba's Lingxi stakeLingxi CEO Zhou Bingshu and management team to remain in placeLingxi is known for hit mobile strategy game 'Three Kingdoms: ​Strategy Edition'HONG KONG, Aug 17 (Reuters) - Alibaba Group (9988.HK), opens new tab is expected to reap more ‌than $2 billion from the sale of its game developer unit Lingxi Games to private equity firm Trustar Capital, a person familiar with the matter told Reuters.

Alibaba and Trustar have reached a formal agreement after several rounds of talks, according to an internal memo sent to ​Lingxi staff on Monday by the game developer's CEO Zhou Bingshu and reviewed by Reuters.

Jumpstart your morning with the latest legal news delivered straight to your inbox from The Daily Docket newsletter. Sign up here.

Lingxi, Alibaba and Trustar ​did not immediately respond to requests for comment from Reuters.

Under the agreement, Alibaba will transfer ⁠all of its Lingxi stake to Trustar, the memo said.

The memo did not disclose the value of the deal ​or when the transaction was expected to close. It also gave no details of regulatory approvals or other conditions attached ​to the deal.

Zhou said in the memo he and Lingxi's management team would continue to lead the company, signalling continuity in the studio's operations following the ownership change.

Bloomberg News, which first reported the memo, said the deal would be worth at least $1.5 billion, citing sources.

AI-FOCUSED ​ALIBABA REVIEWING NON-CORE ASSETSAlibaba, one of China's largest technology companies, operates e-commerce platforms, cloud-computing services and other digital businesses. It ​has been reviewing non-core assets as it directs capital and management attention toward strategic priorities including AI and cloud.

The Chinese tech company ‌had ⁠been seeking a buyer for Lingxi for some time, according to two separate sources familiar with the matter, who spoke on condition of anonymity because the information is confidential.

Trustar, formerly known as CITIC Capital, is an Asia-focused private equity firm that has the industry resources and operational expertise to support Lingxi's next stage of development, according to Zhou.

It was not ​immediately clear whether Alibaba would ​retain any commercial ties ⁠with Lingxi after the sale, including publishing, cloud services or technology partnerships.

LINGXI IN TRANSITIONGuangzhou-based Lingxi Games is best known for 'Three Kingdoms: Strategy Edition', a multiplayer strategy title based on China's ​Three Kingdoms era.

The game was developed in collaboration with Japan's Koei Tecmo Holdings (3635.T), opens new tab, whose ​franchises include 'Romance of ⁠the Three Kingdoms' and 'Nobunaga's Ambition'.

The transaction between Alibaba and Trustar would extend a period of change for Lingxi, which had previously explored external fundraising, the two sources said. A fundraising process planned in late 2023 stalled after China proposed tighter rules for ⁠the online ​gaming sector, one of them said.

Lingxi also underwent a management reshuffle ​in 2024. Zhou, who had led the team behind 'Three Kingdoms: Strategy Edition', became CEO after founder Zhan Zhonghui departed, according to Chinese corporate records.

Reporting by ​Kane Wu in Hong Kong and Eduardo Baptista in Beijing; Additional reporting by Hong Kong newsroom; Editing by Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Kane Wu covers M&A, private equity, venture capital and investment banks in Asia. She tracks the region's most high-profile deals, fundraisings as well as investment trends amidst geopolitical, macroeconomic and regulatory changes. She was nominated for a SOPA Excellence in Business Reporting award for coverage of China regulatory crackdown in 2021. Prior to Reuters, she worked at the Wall Street Journal and also wrote about Asia's loan market for Thomson Reuters Basis Point. She is based in Hong Kong.

Eduardo Baptista is Chief Technology Correspondent, Greater China, for Reuters, based in Beijing. He covers artificial intelligence, semiconductors and emerging technologies. He holds a BA in History from the University of Cambridge.

Qwen and Alibaba logos are seen in this illustration taken, January 29, 2025. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights, opens new tab

SummaryCompaniesEligible China users can connect Qwen to Apple Intelligence on MacSino-American tie-up could help Apple in China's AI PC marketPartnership broadens Qwen's reach beyond Alibaba ecosystemBEIJING, Aug 8 (Reuters) - Apple (AAPL.O), opens new tab has published a guide explaining how eligible Mac users in mainland China ‌can connect Alibaba's (9988.HK), opens new tab Qwen artificial-intelligence service to the U.S. tech giant's Siri digital assistant and Writing Tools feature.

The Mac-specific arrangement could help Apple compete in China's AI PC market, where it has been losing ​market share as domestic manufacturers such as Lenovo have promoted locally developed AI features.

Get a daily digest of breaking business news straight to your inbox with the Reuters Business newsletter. Sign up here.

Here ​are some details:

Qwen is Chinese ecommerce giant Alibaba's family of generative-AI models, ⁠which can create text and images and analyse documents, photos and other material in ​response to user prompts.

Apple's updated Chinese-language guide says users who opt in can use Qwen through ​Siri for more detailed responses to some requests, including analysis of photos and documents. Writing Tools can also draw on the service to create text or images from a description.

The extension is intended for Macs ​running macOS 26.6 or later, subject to China-specific conditions. Users must activate the extension ​and sign in to a Qwen account.

Alibaba cannot use those materials to train or improve its models, according ‌to ⁠the guide.

Mac shipments in mainland China fell 9% in the first quarter year on year to about 800,000 units, leaving it with 9% of the PC market, versus Lenovo's 31% and fast-growing Huawei's 16%, according to Omdia.

Lenovo (0992.HK), opens new tab has made its Tianxi personal AI agent central to ​its AI-PC strategy, while ​Huawei is building ⁠AI functions across its HarmonyOS ecosystem.

Linking Qwen to Siri and Writing Tools gives Apple a locally compliant route to offer more capable document, ​image and content-creation functions while retaining control of the Mac interface.

For ​Alibaba, integration ⁠with Apple's built-in software could broaden Qwen's reach beyond its own applications and cloud services.

Alibaba has said Qwen will be incorporated into Apple Intelligence across iPhone, iPad, Mac and Vision Pro software ⁠in ​China, though Apple's newly published guide covers Macs only.

Alibaba ​this week released Qwen3.8-Max, a 2.4-trillion-parameter model it says is its most capable to date. Apple's guide does not ​identify which Qwen model will power the Mac extension.

Reporting by Eduardo Baptista; Editing by Susan Fenton

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Eduardo Baptista is a Senior Correspondent for Reuters based in Beijing, covering China’s technology, space, and automotive industries. He has led enterprise and investigative reporting on China’s military-linked companies, artificial intelligence and semiconductor supply chains, as well as macroeconomic and industrial policy. Baptista has reported from China for nearly a decade and holds a BA in History from the University of Cambridge.

Key Takeaways Alibaba's operating cash flow fell 53% in FY26 as investment spending accelerated.Free cash flow swung to an RMB46.6 billion outflow from an RMB73.9 billion inflow.Cloud revenues accelerated, but sustained AI spending could keep free cash flow under pressure. Alibaba's (BABA - Free Report) weakening cash flow could become a headwind to its long-term growth potential if heavy investments continue to outpace cash generation. The company generated solid revenue growth in fiscal 2026, but its cash generation deteriorated sharply as it accelerated spending on AI infrastructure, cloud capacity, quick commerce and the Qwen AI ecosystem. Operating cash flow declined 53% year over year in fiscal 2026, while free cash flow swung to an outflow of RMB46.6 billion from an inflow of RMB73.9 billion a year earlier. This decline is primarily due to investments in quick commerce, cloud infrastructure and Qwen user acquisition, underscoring that these initiatives remain strategic priorities despite near-term financial pressure.

At the same time, management indicated that AI demand will require an even larger data center footprint over the next five years, implying sustained capital commitments that could keep free cash flow under pressure. Although Alibaba maintains a strong balance sheet, including RMB520.8 billion of cash and other liquid investments, continued negative free cash flow may eventually reduce financial flexibility if investment returns take longer to materialize.

On the positive side, Cloud Intelligence revenues continue to accelerate, supported by robust AI adoption, suggesting these investments could generate meaningful long-term returns. However, investors should closely monitor whether improving cloud monetization and operating efficiencies can offset persistent cash outflows. Until Alibaba demonstrates consistent recovery in ‘free cash flow’ alongside AI-driven revenue growth, cash flow weakness will likely remain a significant negative factor affecting its long-term investment potential.

How Does Alibaba Stack Up Against Its Main Rivals?Alphabet (GOOGL - Free Report) generates substantially stronger operating cash flow than Alibaba, enabling larger AI and cloud investments without compromising financial flexibility. Alphabet produced $39.1 billion in operating cash flow in the second quarter of 2026 while expanding AI infrastructure and strengthening its global monetization engine. Alphabet's diversified Search, YouTube and Cloud businesses provide durable competitive advantages, whereas Alibaba's free cash flow remains under pressure from aggressive AI investment.

Amazon (AMZN - Free Report) enjoys a stronger cash flow profile than Alibaba, supporting massive AI infrastructure spending backed by customer commitments and long-term returns. Amazon continues funding AWS, custom chips and logistics expansion while expecting future free cash flow acceleration. Amazon benefits from diversified businesses, scale and enterprise demand.

BABA’s Share Price Performance, Valuation & EstimatesBABA shares have declined 21.4% year to date compared with the industry’s fall of 4.1%.

BABA’s YTD Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, BABA is currently trading at a price-to-book ratio of 1.7, below the sector’s average of 4.23. The company carries a Value Score of C.

BABA’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 and 2028 EPS has been revised downward over the past 30 and 60 days. The company has also missed earnings expectations in each of the trailing four quarters, with an average negative surprise of 37.65%.

Image Source: Zacks Investment Research

Key Takeaways Alibaba narrowed AIDC's fiscal 2026 adjusted EBITA loss, moving the unit closer to break-even.Brand and AI tools are boosting monetization, merchant productivity and customer engagement.European compliance costs could slow profitability as fiscal 2027 earnings are projected to rise 15.28%. Alibaba’s (BABA - Free Report) international commerce business is narrowing losses, positioning the segment as a stronger long-term growth driver. Alibaba International Digital Commerce Group (AIDC) — which includes AliExpress, Alibaba.com, Lazada and Trendyol — significantly reduced its adjusted EBITA loss in fiscal 2026 as management improved logistics efficiency, optimized operations and enhanced unit economics, bringing the business closer to break-even.

The Brand+ initiative is attracting higher-quality brands and consumers, supporting stronger monetization, while AI-powered tools such as Accio and Accio Work are helping merchants automate sourcing, product listings and business operations, improving productivity and customer engagement. Alibaba.com’s global B2B marketplace, spanning buyers in more than 190 countries and generating revenues from memberships, value-added services, logistics and digital marketing, provides a diversified foundation for future international expansion. Alibaba has also continued strengthening its cross-border commerce ecosystem by expanding AI capabilities for merchants and broadening its Trade Assurance program into additional markets, reinforcing its strategy to accelerate profitable international growth.

However, investors should monitor regulatory risks, particularly in Europe, where increased compliance requirements and penalties for marketplace operators could raise operating costs and slow the path to sustained profitability for Alibaba's international commerce business.

According to the Zacks Consensus Estimate, earnings are projected to grow 15.28% in fiscal 2027, indicating that continued improvement in international commerce could become an increasingly important contributor to Alibaba's long-term profitability and sustainable growth.

How Rivals Stack Up Against BABAAmazon (AMZN - Free Report) challenges Alibaba through its vast international marketplace, fulfillment network and Prime ecosystem. Amazon benefits from seller-friendly policies, including lower fees in Europe and Brazil, while faster delivery and logistics strengthen global reach. The company also expands cross-border opportunities through growing international operations. Amazon's scale, fulfillment efficiency and trusted brand remain key competitive advantages.

Global-e Online (GLBE - Free Report) competes with Alibaba by enabling brands to sell globally through localized merchant-of-record services. Global-e Online differentiates itself with compliance, duties, taxes, payments and fulfillment capabilities, while Managed Markets and Borderfree expand merchant reach. Global-e Online also benefits from AI-driven automation and growing demand for seamless cross-border commerce, reinforcing its competitive position.

BABA’s Share Price Performance, Valuation & EstimatesBABA shares have declined 33.5% over the past six months compared with the industry’s fall of 4.2%.

BABA’s Six-Month Price Performance
Image Source: Zacks Investment Research

Going by the price/earnings ratio, the company's shares currently trade at 14.78 forward earnings, lower than 21.63 for the industry. BABA has a Value Score of C.

BABA’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 EPS has declined 6.78% to $6.88 over the past 60 days, and those for fiscal 2028 have decreased 9.06% to $9.53. However, the estimate still reflects robust year-over-year growth of 76.86%.

Image Source: Zacks Investment Research

Alibaba currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

On the July 16, 2026 episode of Mad Money, a caller identified as D phoned in about his sizable Alibaba (NYSE:BABA | BABA Price Prediction) position and asked Jim Cramer whether patience was still the right call. Cramer’s response was to hold the position and let the investment cycle play out.

Cramer told D, “I think you need to have patience here. I think it’s just down on a dip. It’s really still the best way to play China.“ He then framed his own geopolitical stance, saying, “I am a harder line on the Chinese than most people you see on air. But you know what? I want to try to help people make money, and I think you can make money on Alibaba.“ Cramer also referenced China’s GDP growth figures as “down 20% and 4.4%” during the segment.

Alibaba Is Sacrificing Profits to Build Its AI Future Alibaba, run by CEO Eddie Wu, is in a deliberate reinvestment phase. Fiscal Q4 2026, reported May 13, 2026, showed revenue of $35.28 billion, up 3% YoY, with EPS of $0.09 and an operating loss of $123 million. Adjusted EBITA collapsed 84% to $740 million as the company poured capital into AI infrastructure and quick commerce. Free cash flow ran to negative $2.508 billion on capex of $3.898 billion.

Cloud Revenue Jumps 40% as Alibaba’s AI Bet Takes Off The bright spot was the business’s cloud unit. Cloud Intelligence Group revenue accelerated to 40% growth, with AI-related products at 30% of external cloud revenue, hitting an 11th consecutive quarter of triple-digit AI product growth. CEO Eddie Wu said, “Alibaba’s full-stack AI investments have progressed from incubation to commercialization at scale.”

BABA opened at $114.97 on Monday, July 20, before soaring 5.71% in intraday trading. The stock is down roughly 17.51% year-to-date but up 13.50% over the past month. Wall Street’s consensus target sits at $190.01, with 8 Strong Buy and 30 Buy ratings against just 2 negative calls.

_________________________________

What's Your Number...?Here's a question most people 5y from retirement can't answer: at your current savings rate, how much do you need, and how long will it actually last? A good advisor can put a date on that in a single meeting. SmartAsset's free quiz matches you with up to three fiduciary advisors serving your area, so you can get YOUR retirement number now (sponsor)

__________________________________________

Cramer Says Balance Alibaba With These 2 Long-Term Winners Cramer paired his Alibaba call with 2 other top long-term ideas: “If you want some long-term winners, look at something like a J&J or Wells Fargo.” Both fit the steady-compounder profile that balances a volatile China ADR.

Johnson & Johnson (NYSE:JNJ) posted Q1 2026 revenue of $24.06B, up 9.9% YoY, and raised FY guidance to $100.3B-$101.3B in revenue with adjusted EPS of $11.45-$11.65. It just delivered its 64th consecutive year of dividend increases. Shares are up 23.63% YTD and carry a beta of 0.235.

Wells Fargo (NYSE:WFC), under CEO Charlie Scharf, reported Q1 2026 revenue of $21.45B and EPS of $1.60, returned $5.4B to shareholders including dividends, and now targets ROTCE of 17-18% after the Fed’s asset cap was removed in 2025. It trades at a forward P/E of just 12.

Key Takeaways If You’ve Been Thinking About Retirement, Pay Attention (sponsor) Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance, and SmartAsset’s simple quiz makes it easier than ever for you to connect with a vetted financial advisor. Here’s how:

Answer a Few Simple Questions. 

Get Matched with Vetted Advisors 

Choose Your  Fit 

Why wait? Start building the retirement you’ve always dreamed of. Get started today! (sponsor)  

Contact [email protected] for any questions or corrections.

Alibaba's US-listed shares rose more than 6% on Wednesday after the Chinese technology giant confirmed that its Qwen artificial intelligence model will power Apple Intelligence features for users in China.

This marks a major milestone in Apple's long-delayed AI rollout in the country.

Apple shares also gained about 1.8%, while Baidu's US-listed stock climbed roughly 2.8% after the company separately confirmed it was also collaborating with Apple on AI features for Chinese iPhone users.

The announcement came after China's cyberspace regulator approved Apple Intelligence for use on iPhones in China, removing one of the biggest regulatory hurdles that had delayed the launch since Apple first unveiled the AI platform in 2024.

China requires all large language models and generative AI services to obtain regulatory approval before they can be offered to the public.

Apple Intelligence and Samsung's Galaxy AI were the only foreign AI services approved in the latest batch.

Domestic smartphone makers Huawei, Oppo, Vivo, Xiaomi and ZTE also received approvals, with ByteDance serving as ZTE's AI partner.

The approval follows months of discussions between Apple and Chinese authorities as geopolitical tensions between Washington and Beijing have intensified over artificial intelligence and advanced technology.

An Alibaba spokesperson confirmed to CNBC that the company's AI model would become part of Apple's ecosystem in China.

"Qwen will be integrated into Apple Intelligence experiences within iOS, iPadOS, macOS, and visionOS for users in China," the spokesperson said.

According to Bloomberg, Qwen will enable capabilities including text generation, image generation, and image understanding across Apple's devices without requiring users to switch between separate applications.

"The Apple-Qwen integration gives users the ability to access the model's capabilities, like text and image understanding and generation, without needing to jump between tools," the Alibaba spokesperson added.

Alongside Alibaba, Apple is also collaborating with Baidu to develop AI features tailored for Chinese users.

A Baidu representative told the South China Morning Post that the company was working with Apple on Apple Intelligence features for the Chinese market.

Reuters also reported that Baidu would contribute to Apple's localized AI services.

The dual partnerships underscore Apple's strategy of working with domestic AI leaders to comply with China's regulatory framework while expanding Apple Intelligence outside Western markets.

The announcement comes amid growing competition between Chinese and US artificial intelligence companies.

Earlier this month, Alibaba prohibited employees from using Anthropic's AI models, while US lawmakers have been exploring ways to curb adoption of Chinese AI systems by American companies.

Separately, reports indicated that Meta had been forced to unwind its planned $2 billion acquisition of Chinese AI startup Manus following intervention by Beijing.

The development also coincides with Apple's efforts to improve on-device AI capabilities.

CNBC reported on Tuesday that Apple is in discussions with Silicon Valley startup PrismML, which claims it can compress advanced AI models sufficiently to run directly on iPhones.

PrismML, a Caltech spinout backed by Khosla Ventures, recently released compressed versions of Alibaba's open-source Qwen model, reducing its size from roughly 54 GB to less than 4 GB, allowing the full 27-billion-parameter model to operate on an iPhone 15 or newer device.

Key Takeaways Alibaba removed Qwen AI companion features as China prepares new rules for human-like AI services.BABA shares jumped 12.2% after signs of narrowing instant-commerce losses and steady profitability.Alibaba Cloud revenues rose 38% as AI product revenues logged triple-digit growth for an 11th quarter. Alibaba Group (BABA - Free Report) is pulling artificial intelligence (AI) companion features from its Qwen platform as Beijing prepares to enforce sweeping new rules on humanlike AI services, even as the stock stages its sharpest rally in months on unrelated signs of operational improvement. Qwen's humanlike and user-created agents stopped working on July 10, with wider agent services following five days later, aligning the shutdown with the July 15 rollout of China's first dedicated regulatory framework governing AI that simulates human personality.

The measure, co-issued on April 10, 2026, by the Cyberspace Administration of China and four other agencies, cites concerns including radicalization, data privacy, psychological harm and compulsive use. Compliance requires anti-addiction systems, mandatory usage notifications and real-time detection of unhealthy dependence — obligations that clash with agents built to remember users and sustain ongoing relationships. Unlike ByteDance, which offered a data-export window for its Doubao personas, Alibaba has not detailed a migration path for affected Qwen users.

The regulatory retreat came in the same week Alibaba shares jumped 12.2% in Hong Kong to HK$107.5, their largest single-session gain since September 2025. The move followed a pre-earnings briefing indicating losses in the company's instant-commerce business narrowed meaningfully in the June quarter while overall profitability held steady, reigniting investor confidence ahead of the August 28 earnings report. Sentiment was further supported by reports that Alibaba is consolidating three separate enterprise AI Agent tools — QoderWork, Wukong and MuleRun — into a single productivity platform led by DingTalk chief executive Chen Yusen, alongside reports of accelerating Alibaba Cloud revenue growth in the first quarter of fiscal 2027.

The developments follow a fourth-quarter fiscal 2026 report in which Alibaba's Cloud Intelligence Group posted revenues of 41.63 billion yuan ($6.04 billion), up 38% year over year, with AI-related product revenues extending triple-digit annual growth for an eleventh consecutive quarter and representing 30% of the cloud unit's external revenues. Group-wide, total revenues rose 3% to 243.38 billion yuan, while adjusted EBITA fell 84% amid heavy AI infrastructure and quick-commerce spending. Together, the two threads illustrate a company navigating tighter domestic rules on consumer-facing AI even as its cloud and enterprise AI ambitions draw renewed investor attention.

U.S. Peers Navigate Similar AI Investment CyclesAlibaba's heavy AI infrastructure spending mirrors trends at Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) , both of which have posted comparable margin pressure from AI capital expenditure. Microsoft has continued expanding data-center capacity to support its cloud AI services, while Amazon has similarly scaled AI infrastructure investment across its cloud unit, each citing rising demand for AI-related workloads. Unlike Alibaba, neither Microsoft nor Amazon faces domestic regulatory restrictions on humanlike AI companion features, since such rules remain specific to China's market. Microsoft and Amazon shares have shown more muted single-session volatility than Alibaba's recent surge, reflecting differing investor sensitivity to regulatory versus earnings-driven catalysts.

BABA’s Share Price Performance, Valuation & EstimatesBABA shares have plunged 33% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s decline 0.9% and 0.3%, respectively.

BABA’s YTD Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, BABA stock is currently trading at a trailing 12-month Price/Earnings ratio of 31.06X compared with the sector’s 28.6X. BABA has a Value Score of D.

BABA’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $6.86 per share, down 5.9% over the past 30 days, indicating a 76.35% year-over-year increase.

Alibaba currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

watch now

Alibaba will ban employees from using Anthropic's artificial intelligence tools for work purposes as of July 10, citing concerns that the U.S. company has back-door security risks, CNBC confirmed on Monday.

The Chinese e-commerce giant has put Anthropic's Claude Code on a high-risk software list, according to people familiar with the matter, who asked not to be named in order to discuss internal operations.

Alibaba's move follows Anthropic's decision in June to send a letter to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, blaming the Chinese tech titan of "brazenly" and "illicitly" attempting to extract its AI capabilities. Anthropic accused Alibaba of carrying out "the largest known distillation attack" on it to date.

Anthropic's terms of service dictate that Chinese companies and other "adversarial nations" are banned from using its models.

Alibaba employees are required to uninstall all Anthropic models and agent products and instead use the Chinese company's own AI assistant, Qoder, the people said.

Alibaba and Anthropic both declined to comment.

Read more CNBC tech newsMeta's push into cloud computing means Wall Street has to prepare for lower marginsChip stocks that notched record rallies in second quarter start Q3 with a dudPlayStation will end physical disc production for new games in 2028Employers who laid off workers citing AI are already starting to regret itThe ban comes amid a wave of online blowback in China against Anthropic as posts on Reddit and GitHub outlined the use of hidden code meant to detect if users might be based in the country.

The Financial Times reported Friday that Anthropic is moving to close loopholes that have allowed Chinese companies to bypass restrictions and access Claude through third countries.

The UK newspaper cited sources as saying Chinese fintech group Ant "had provided employees with corporate Claude accounts that were accessed through the company's intranet, which is connected to its Singapore-based entity."

The FT reported that TikTok parent company Bytedance "does not facilitate access to Claude," but did start a reimbursement program that allows engineers to expense personal subscriptions. The engineers can access those subscriptions on virtual private networks.

Ant and ByteDance declined to comment on the Financial Times report.

ByteDance's reimbursement policy, unveiled on April 2, is meant to encourage staffers to "experience and learn" about a wider range of AI products to enhance their skills, a person familiar with the matter told CNBC. The person asked not to be named in order to discuss internal policies.

watch now

Key Takeaways Alibaba is integrating AI across its consumer platforms to improve search, discovery and shopping experiences.BABA is investing in fulfillment efficiency and unit economics to improve the profitability of quick commerce.BABA's quick commerce orders rose 2.7 times year over year, boosting engagement across its retail ecosystem. Alibaba's (BABA - Free Report) digital commerce strategy is evolving into a more integrated, AI-enabled retail ecosystem that could support growth in fiscal 2027. Rather than relying solely on gross merchandise volume expansion, Alibaba is enhancing merchant productivity, consumer engagement and platform monetization across Taobao, Tmall and its instant commerce offerings. The company has also revamped its merchant development program by linking platform subsidies to merchants' marketing spend, an initiative aimed at improving advertising penetration and long-term monetization. These efforts are already gaining traction, with customer management revenue (CMR) increasing 8% year over year on a like-for-like basis in the March quarter, while China E-commerce Group revenues rose 6% to RMB 122 billion.

Quick commerce has become a strategic extension of Alibaba's broader retail platform rather than a standalone business. Order volume expanded 2.7 times year over year, supporting stronger growth at Freshippo and Tmall Supermarket while helping drive double-digit monthly active consumer additions for the Taobao app. At the same time, the integration of the Qwen app with Taobao, Tmall, Alipay, Amap and Fliggy is embedding AI-driven search, discovery and shopping assistance across Alibaba's consumer ecosystem, creating additional opportunities to improve user engagement and purchase frequency over time.

These investments have weighed on near-term profitability, with Alibaba China E-commerce Group's adjusted EBITA declining 40% year over year as spending on quick commerce, technology and user experience increased. However, improving fulfillment efficiency, higher average order values and stronger unit economics indicate that these investments are becoming more productive. If Alibaba continues translating higher consumer engagement into stronger merchant spending while improving the profitability of its quick commerce operations, its integrated digital commerce ecosystem could emerge as a meaningful catalyst for fiscal 2027 growth.

How Alibaba Stacks Up Against PDD and JD ?Alibaba faces intense competition from PDD Holdings (PDD - Free Report) and JD.com (JD - Free Report) , both of which continue to invest in strengthening their digital commerce ecosystems.

PDD Holdings has expanded its value-driven marketplace through AI-enabled merchant tools and Temu's international growth, while JD.com leverages its self-operated logistics network and omnichannel retail capabilities to enhance fulfillment speed and customer experience. Unlike PDD Holdings and JD.com, Alibaba operates a broader ecosystem spanning Taobao, Tmall, Taobao Instant Commerce, Ele.me, AliExpress and Alibaba.com, creating multiple consumer touchpoints across domestic and cross-border commerce. As PDD Holdings and JD.com intensify competition, Alibaba's AI-powered ecosystem, merchant monetization initiatives and integrated commerce platform could provide a differentiated long-term growth advantage.

BABA’s Share Price Performance, Valuation & EstimatesBABA shares have plunged 34.8% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector, which have declined 6.6% and 1.9%, respectively.

BABA’s YTD Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, BABA stock is currently trading at a trailing 12-month Price/Earnings ratio of 30.23X compared with the industry’s 28.31X. BABA has a Value Score of D.

BABA’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $7.29 per share, down by a penny over the past 30 days, indicating a 87.4% year-over-year increase.

Alibaba currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.