My analysis is focused on high-quality companies, that can outperform the market over the long-run due to a competitive advantage (economic moat) and high levels of defensibility. Focused on European and North American companies, but without constraints regarding market capitalization (from large cap to small cap companies).My academic background is in sociology and I hold a Master’s Degree in Sociology (with main emphasis on organizational and economic sociology) and a Bachelor’s Degree in Sociology and Hi ...

Last week, Chinese tech conglomerate Alibaba announced a major uptick in AI spending.Now, the company has put a price tag on the effort, according to a Monday (Feb. 24) report by Reuters: at least 380 billion yuan, or $52.44 billion, over a three-year period.During an earnings call last week, the company said it would spend more on artificial intelligence (AI) in the next three years than it has in the last 10, without providing an exact figure. The goal, management said, is to help Alibaba pursue artificia ...

Shares of Alibaba (BABA -9.75%) were taking a dive today after investors balked at the company's big spending plans in cloud and artificial intelligence (AI).As a result, the stock was down 9.7% as of 11:24 a.m. ET. Alibaba faces investor skepticismIt's not unusual for investors to react poorly to massive capital expenditure layouts and it seems like that's what's happening here.The Chinese tech giant, best known for its Tmall and Taobao e-commerce platforms, said today that it plans to invest at least $53 ...

Core Financial Performance - Alibaba Group reported third-quarter fiscal 2025 revenues of $38.3 million, an 8% year-over-year increase in domestic currency terms to RMB 280.1 billion, slightly exceeding expectations [1] - Non-GAAP earnings of $2.93 per ADS fell short of estimates, indicating a complex growth narrative [1] Core Business Momentum and AI Integration - The core business showed resilience, with Taobao and Tmall Group improving monetization through enhanced GMV-based service charges and increased adoption of the marketing platform Quanzhantui [2] - Customer management revenues grew 9% year over year, reflecting successful strategic initiatives in user experience enhancement [2] - The cloud segment maintained triple-digit growth for the sixth consecutive quarter, particularly in AI-related products [2] Strategic Investment and Future Outlook - Alibaba plans to invest more in cloud and AI infrastructure over the next three years than it has in the past decade, signaling a strategic pivot towards capturing opportunities in the AI era [3] - This aggressive investment strategy may pressure near-term margins but is aimed at long-term growth [3] Market Estimates and Financial Health - The Zacks Consensus Estimate for fiscal 2025 revenues is $137.25 billion, indicating 5.17% year-over-year growth [4] - The Zacks Consensus Estimate for fiscal 2025 earnings has been revised downward by 6.2% over the past 60 days to $8.72 per share, reflecting market uncertainty about Alibaba's growth trajectory [4] - The company maintains a strong financial position with a net cash position of RMB 378.5 billion ($51.9 billion) as of Dec. 31, 2024 [5] Stock Performance and Valuation - Alibaba's stock has gained 87.9% in the past year, outperforming the Zacks Internet-Commerce industry and the S&P 500 [6] - The stock is currently trading at a forward 12-month Price/Earnings ratio of 14.24X, significantly lower than the industry average of 23.98X, indicating it is undervalued compared to peers [10] Investment Perspective - While Alibaba's strategic initiatives appear strong, the substantial planned investments in AI and cloud infrastructure may impact near-term profitability [13] - Current market valuations suggest limited immediate upside potential, and investors might benefit from waiting for a more attractive entry point [14] - Existing shareholders are advised to maintain positions, while potential new investors may find better entry points in 2025 as the market evaluates the impact of increased capital expenditure [15]

Market Overview - The U.S. stock market experienced a downturn, with the S&P 500 declining by 1.7%, the Dow Jones falling by 2.5%, and the Nasdaq slipping by 2.5% due to geopolitical tensions, inflation concerns, and a potentially less-dovish Federal Reserve [1] - Investors showed increased interest in Chinese stocks, influenced by the DeepSeek euphoria, which negatively impacted major U.S. tech companies [1] Defense Budget - The U.S. Defense Secretary proposed an 8% reduction in military spending over the next five years, which would mark the largest cut in Pentagon spending since 2013 if implemented [2] Economic Indicators - The University of Michigan consumer sentiment index dropped to 64.7 in February, reflecting a nearly 10% decline, as consumers expressed concerns over inflation and potential new tariffs [3] - U.S. existing home sales fell to 4.08 million units in January, and the services purchasing managers' index (PMI) entered contraction territory for February [4] ETFs Performance SMCI-Heavy ETFs - Defiance Daily Target 2X Long SMCI ETF (SMCX) increased by 88.4%, and GraniteShares 2x Long SMCI Daily ETF (SMCL) rose by 86.4% as Super Micro Computer (SMCI) stock surged by 30.7% last week, with projected sales reaching $40 billion in 2026, indicating a 60% growth from 2025 revenue guidance [5] Alibaba-Heavy ETF - GraniteShares 2x Long BABA Daily ETF (BABX) rose by 28.2%, with Alibaba (BABA) stock increasing by 13.6% after reporting a 7.6% year-over-year revenue growth to $38.5 billion, despite missing earnings estimates [6] Natural Gas-Heavy ETF - ProShares Ultra Bloomberg Natural Gas (BOIL) increased by 25.6% as U.S. natural gas futures rose to $4.3/MMBtu, driven by cold weather impacting supply and increasing demand [7] Micron-Heavy ETF - Direxion Daily MU Bull 2X Shares (MUU) rose by 15.3%, while Micron Technology (MU) stock gained 0.4% over the last week, despite concerns about a decline in gross margins for the upcoming quarter [8][9]

The Chinese stock market has been a dubious investment for years, as major indices in the country recorded massive losses. The situation began changing in September 2024 and by early 2025, appears to have mostly reversed. In this climate, Alibaba (NYSE: BABA) — Michael Burry’s biggest position per the latest available 13-f filing — enjoyed a major rally and, even more recently, received a massive price target upgrade from one of America’s biggest financial institutions, Morgan Stanley (NYSE: MS). Specifical ...

Group 1 - Alibaba plans to invest over $50 billion (approximately 380 billion yuan) in artificial intelligence and cloud computing over the next three years, marking a significant commitment to technological innovation and AI-driven growth [3][4] - The investment will exceed Alibaba's total spending on AI and cloud computing over the past decade, indicating a strong focus on enhancing its infrastructure in these areas [4] - Alibaba reported an 8% increase in revenue for the three months ending in December, reaching 280 billion yuan, which exceeded estimates and led to a 14% surge in its Hong Kong shares [4] Group 2 - The Chinese technology sector, including Alibaba, has seen a resurgence in investor confidence following a prolonged regulatory crackdown that began in 2020 [5][6] - Recent positive developments in the industry, such as the launch of a new AI chatbot by a Chinese startup, have contributed to this revival [5] - The Chinese economy is facing challenges such as sluggish consumption and issues in the property sector, but government support for the private sector has been indicated by President Xi Jinping [7][8]

Alibaba has shifted its focus to artificial general intelligence, or AGI.The Chinese tech giant recently reported an 8% rise in quarterly revenue, boosting its stock price.Alibaba plans to invest $53 billion in AI and cloud over the next three years as it competes with US tech giants.Hot stock Alibaba has set its sights beyond AI to focus on artificial general intelligence, or AGI. "We aim to continue to develop models that extend the boundaries of intelligence," said Eddie Wu, Alibaba's CEO, on Thursday. H ...

Investment Rating - The report maintains a "Buy" rating for Alibaba Group [6][40]. Core Insights - The report emphasizes that Alibaba is focusing on AI and cloud computing as core strategic areas, with significant investments planned to enhance its capabilities in these domains [6][19]. - The collaboration with Apple to develop localized AI features for iPhone users is expected to enhance Alibaba's AI commercialization pathways [6][39]. - The financial forecasts for Alibaba's revenue are projected at 155.9 billion, 177.3 billion, and 190.2 billion RMB for FY25, FY26, and FY27 respectively, indicating a positive outlook for revenue recovery and growth [6][19]. Summary by Sections 1. AI Innovation and Development - DeepSeek's V3 and R1 series models have been launched, marking a significant advancement in AI capabilities, with performance comparable to leading models like OpenAI's GPT [10][12]. - The introduction of the MoE architecture and other optimizations has significantly reduced training costs, enhancing the commercial viability of AI applications [12][15]. 2. Acceleration of AI Strategy - Alibaba's cloud intelligence group reported a revenue of 31.742 billion RMB for FY3Q25, a 13% year-on-year increase, with AI-related product revenues growing at triple-digit rates for six consecutive quarters [19][24]. - The capital expenditure (Capex) for FY3Q25 reached 31.8 billion RMB, reflecting a substantial increase aimed at bolstering AI and cloud infrastructure [24][27]. 3. Investment Analysis Recommendations - The report projects a valuation space of 26.294 billion RMB for the Taotian Group and 4.196 billion RMB for other businesses, with a target price raised to 174 USD per share, representing a 21% upside potential [6][19]. - The focus on e-commerce, technology, and internet platform products is expected to drive Alibaba's growth trajectory [6][19].

Investment Rating - The report maintains a "Buy" rating for Alibaba (BABA) [3][9][15] Core Insights - Alibaba's e-commerce and cloud segments exceeded expectations, with significant investments in AI strategy [9][10][12] - The company reported a revenue of RMB 280.2 billion for 3QFY25, representing an 8% year-over-year increase, and a non-GAAP net profit of RMB 51.1 billion, up 6% year-over-year [10][12] - The collaboration with Apple aims to enhance AI commercialization and expand cloud market share [12][15] Financial Data and Earnings Forecast - Revenue projections for FY25, FY26, and FY27 have been adjusted to RMB 1,001.4 billion, RMB 1,099.9 billion, and RMB 1,203.2 billion respectively, reflecting growth rates of 6.4%, 9.8%, and 9.4% [9][18] - Adjusted net profit forecasts for FY25, FY26, and FY27 are now RMB 155.9 billion, RMB 177.3 billion, and RMB 190.2 billion respectively [9][15] - The adjusted EBITA for 3QFY25 was RMB 54.9 billion, a 4% increase year-over-year, with a margin of 10% [10][12]