Alibaba Is Spending Billions to Scale Up Its Data Centers. Is It Time to Buy BABA Stock Now?

Core Insights - Alibaba is focusing on growth areas such as artificial intelligence (AI) and global expansion, raising $3.2 billion through convertible senior notes primarily for cloud infrastructure scaling [1][2] - Approximately 80% of the raised capital will be allocated to expanding data centers and enhancing AI-driven services, while 20% will support international commerce operations [2][4] - The company's Cloud Intelligence division is benefiting from the AI trend, positioning Alibaba to capture a larger market share in the expanding cloud and AI sectors [3][4] Strategic Context - Alibaba's shift towards cloud services and AI is strategic, given the competitive landscape in its core e-commerce business, which is experiencing rising competition [4] - The focus on cloud and global commerce is seen as critical for diversification and resilience in Alibaba's future growth [4] - Despite the potential upside from AI-powered cloud services, there are concerns about whether the current stock price reflects this optimism, as Alibaba shares have surged approximately 80% year-to-date [5][6] Financial Implications - The investments in AI and cloud computing are expected to impact margins and earnings per share (EPS) negatively in the short term, with projections indicating a dip in Alibaba's bottom line for fiscal 2026 [6]