Hua Er Jie Jian Wen·2025-08-30 03:32Core Viewpoint - Nomura Securities believes Alibaba is making substantial investments in instant e-commerce and artificial intelligence to secure long-term growth and market dominance, despite short-term profit pressures [1][2]. Investment Strategy - Alibaba is engaging in "cost-no-object" investments in AI and instant e-commerce, significantly impacting its financial statements [2][3]. - The newly established China E-commerce Group (CEG) reported a 21% year-over-year decline in adjusted profit, amounting to a decrease of 10 billion RMB, primarily due to a 11 billion RMB investment in instant e-commerce [2][3]. Financial Performance - Alibaba's capital expenditure reached 38 billion RMB this quarter, a 57% increase quarter-over-quarter and a 2.2 times increase year-over-year, indicating strong confidence in AI's future prospects [3][7]. - The expected loss for the instant e-commerce segment is projected to peak at 22 billion RMB, with funds allocated for expanding delivery teams and increasing order volume [2][3]. Market Impact - Despite significant investments, initial returns are promising, particularly in enhancing the overall ecosystem's growth [4][5]. - As of August, Alibaba's daily order volume in instant e-commerce reached 80 million, narrowing the gap with market leader Meituan, which is estimated at over 90 million orders [5][6]. User Engagement - Instant e-commerce has positively impacted Alibaba's core e-commerce business, with a 25% year-over-year increase in monthly active buyers on the Taobao app [6][7]. - Customer management revenue (CMR) grew by 10% year-over-year, aligning with market expectations, and management expressed confidence in maintaining similar growth rates in the coming quarters [6][7]. Long-term Vision - Alibaba's current strategy is characterized as a long-term bet, with ambitious goals for instant e-commerce to contribute approximately 1 trillion RMB in GMV by 2028, representing a 10% market increment [7][8]. - The company aims to reduce losses per order by 50% within two months through operational efficiency and economies of scale, indicating a focus on building a sustainable business model [7][8]. Conclusion - Alibaba is signaling its commitment to strategic transformation through significant investments in instant e-commerce and AI, which not only aim to catch up with competitors but also activate growth potential in its core business [8].