25 November 2025 | 8:08PM HKT Equity Research Alibaba Group (BABA): 2QFY26 First Take: Solid Cloud/CapEx beat; In-line eCommerce with eyes on quick commerce; Buy Alibaba reported a solid beat in cloud growth (+34% yoy) and AI capex intensity (+80% yoy), while delivered broadly in-line eCommerce CMR (+10% yoy) and group EBITA (-78% yoy) on the back of (peak) quick commerce investments over the last quarter. Key positive surprises came from cloud revenue growth (+34% yoy overall/+29% from external, vs. GSe: + ...

How did Baba do it, Tom. Where did it where did it exceed expectations. Yeah.Vonnie, an interesting time because we talk about those tensions between Japan and China and the moves by President Trump to secure the lead that the US currently has when it comes to A. I. because Alibaba really is a litmus test in terms of how far and how effectively China is particularly pushing the adoption, as well as the innovation around AI's.The top lines of revenue. Yes, it was a beat. E-commerce was also a big for Alibaba ...

Core Insights - Alibaba Group's cloud business revenue surged by 34% in the latest quarter, driven by the growth in artificial intelligence [1][3] - Overall revenue for the July-September quarter increased by only 5% year-on-year to 247.8 billion yuan ($35 billion), while profit fell by 52% due to intense price competition in the e-commerce sector [2] - The company plans to invest at least 380 billion yuan ($53 billion) over three years to enhance its cloud computing and AI infrastructure, with potential for increased investment to meet rising AI demand [3][4] Financial Performance - Alibaba's total revenue for the quarter was 247.8 billion yuan ($35 billion), reflecting a 5% year-on-year increase [2] - The company's profit experienced a significant decline of 52% compared to the previous year [2] - The cloud revenue growth of 34% outpaced the 26% increase seen in the previous quarter [3] Market Position and Competitors - Alibaba's upgraded AI chatbot Qwen achieved 10 million downloads within the first week of its public launch, indicating strong market interest [4] - Competitor JD.com reported a 55% net profit drop in the same quarter, highlighting the competitive pressures in the e-commerce landscape [2] - Tencent reported a 15% year-on-year revenue increase, while Baidu experienced a 7% revenue decline, showcasing mixed results among Chinese tech firms [6] Stock Performance - Alibaba's shares rose by 2% on Tuesday and 2.4% before the opening of the New York Stock Exchange, with a year-to-date increase of over 90% driven by optimism regarding AI advancements [5]

Alibaba’s latest earnings report shows the Chinese tech megacap leaning hard into the two engines that management believes will define its future — namely, "instant commerce" and AI. And those bets are starting to pay off. For the quarter ended September 30, Alibaba reported 15% revenue growth over last year, excluding its divested retail operations — making for one of its strongest showings in recent memory. The company credited growth in consumer activity and its expansion into one-hour delivery, a much ...

Financial Performance - Total revenue increased by 5% year-over-year to RMB 247795 million for the quarter ended September 30, 2025[10] - Income from operations decreased significantly by 85% year-over-year to RMB 5365 million[10] - Adjusted EBITA decreased by 78% year-over-year to RMB 9073 million[10] - Net loss from free cash flow was RMB 21840 million, compared to a positive free cash flow of RMB 13735 million in the same quarter of 2024[10] Segment Performance - Alibaba China E-commerce Group revenue increased by 16% year-over-year[7] - Alibaba International Digital Commerce Group (AIDC) revenue increased by 10% year-over-year[7] - Cloud Intelligence Group revenue increased significantly by 34% year-over-year[7] - All Others segment revenue decreased by 25% year-over-year[25] Business Highlights - Quick commerce revenue increased by 60%, driven by order growth from "Taobao Instant Commerce"[31] - Customer management revenue increased by 10% year-over-year, driven by improved take rate[8] - The company repurchased 17 million ordinary shares (equivalent to approximately 2 million ADSs) for a total of US$253 million[14]

Core Insights - Alibaba showcased its AI technology applications at the World Artificial Intelligence Conference, highlighting advancements in its cloud computing division which contributed to better-than-expected revenue in the fiscal second quarter [1] Financial Performance - Alibaba reported revenue of 247.8 billion Chinese yuan ($34.8 billion) for the fiscal second quarter, exceeding LSEG estimates of 242.65 billion yuan, marking a 5% year-on-year increase [1] - The cloud computing division saw a significant 34% year-on-year rise in revenue, reaching 39.8 billion yuan, surpassing expectations of 37.9 billion yuan and outpacing the 26% growth recorded in the previous quarter [2] Investment and Development - The company plans to increase spending on AI models and infrastructure development, building on a previously announced investment of 380 billion yuan ($53 billion) over three years [3] - Alibaba's Qwen app, a competitor to OpenAI's ChatGPT, achieved over 10 million downloads within its first week of launch, powered by Alibaba's AI models [3] Market Strategy - Alibaba is heavily investing in the instant commerce market, which focuses on super-fast delivery of certain items, although this investment has impacted the overall profitability of the business [4]

Core Insights - Alibaba Group has entered an investment phase focusing on AI technologies and infrastructure, leading to strong growth in its AI + Cloud and consumption businesses, with Cloud Intelligence Group revenue up 34% and AI-related product revenue achieving triple-digit growth for the ninth consecutive quarter [2][3] Financial Performance - For the quarter ended September 30, 2025, Alibaba reported revenue of RMB247,795 million (US$34,808 million), a 5% year-over-year increase, with a like-for-like growth of 15% excluding disposed businesses [4][23] - Income from operations decreased by 85% year-over-year to RMB5,365 million (US$754 million), primarily due to a significant drop in adjusted EBITA, which fell 78% to RMB9,073 million (US$1,274 million) [4][51] - Net income attributable to ordinary shareholders was RMB20,990 million (US$2,948 million), a 52% decrease year-over-year, while non-GAAP net income dropped 72% to RMB10,352 million (US$1,454 million) [4][59] - Diluted earnings per ADS were RMB8.75 (US$1.23), down 52% year-over-year, with non-GAAP diluted earnings per ADS at RMB4.36 (US$0.61), a 71% decrease [4][61] Segment Performance - Alibaba China E-commerce Group revenue increased by 16% year-over-year to RMB132,578 million (US$18,623 million), with customer management revenue up 10% [27][31] - Quick commerce revenue surged 60% year-over-year to RMB22,906 million (US$3,217 million), driven by order growth from "Taobao Instant Commerce" [31][34] - Cloud Intelligence Group revenue grew 34% year-over-year to RMB39,824 million (US$5,594 million), with public cloud revenue growth attributed to the adoption of AI-related products [36][17] - The All Others segment saw a 25% revenue decline to RMB62,969 million (US$8,846 million), primarily due to the disposal of Sun Art and Intime businesses [38] Strategic Initiatives - The company is focusing on enhancing user experience and operational efficiency in its quick commerce business, onboarding approximately 3,500 Tmall brands to improve product offerings [9] - Alibaba Cloud continues to lead the AI cloud market in China with a 35.8% market share, driven by comprehensive AI capabilities and strong customer adoption [19][17] Cash Flow and Investments - Net cash provided by operating activities was RMB10,099 million (US$1,419 million), a 68% decrease year-over-year, while free cash flow was an outflow of RMB21,840 million (US$3,068 million) [64] - As of September 30, 2025, cash and other liquid investments totaled RMB573,889 million (US$80,614 million) [5]

Group 1 - The expansion of the AI market has led to significant increases in American tech stocks, pushing the S&P 500's valuations higher [1][2] - The S&P 500 is currently trading at 30 times earnings, well above its historical average of 20 times over the past two decades, indicating potential for a market correction [2] - Investors are advised to consider undervalued Chinese tech stocks instead of chasing high-flying U.S. tech stocks, as many Chinese companies continue to grow despite current market pressures [3] Group 2 - Alibaba, a leading Chinese e-commerce and cloud infrastructure company, has seen its stock rise approximately 80% this year but remains 50% below its all-time high, trading at 18 times next year's earnings [4][9] - The company faced significant challenges due to a crackdown by Chinese regulators in 2021, which included a record fine of $2.8 billion and restrictions on its business practices [6] - Despite a revenue growth of 19% in fiscal 2022, Alibaba's revenue growth slowed to just 2% in fiscal 2023, leading to concerns about its growth potential [8]

Coatue Management's billionaire boss is making eyebrow-raising moves in the AI arena.In case you missed it, one of the most important data releases of the entire fourth quarter occurred on Friday, Nov. 14.While you might have been eager to clock out or start your weekend early, institutional investors with at least $100 million in assets under management (AUM) were filing Form 13F with the Securities and Exchange Commission. This required filing, due no later than Nov. 14, concisely lays out which stocks, e ...

Core Insights - Chinese stocks, particularly JD.com, Tencent, and Alibaba, have shown mixed earnings results, with JD.com facing margin pressures despite user growth and revenue beats [2][4][6] - The overall e-commerce sector in China is experiencing challenges, with companies resorting to subsidies and low pricing to attract customers amid consumer uncertainty [8][9][16] JD.com - JD.com reported a decline in net margins to 1-2% from 4-5% year-over-year, primarily due to high costs associated with subsidies in their instant commerce business [4][6] - Despite the margin pressure, JD.com reached 700 million users and reported revenue growth, indicating a strong user base [6][7] - The company is exploring various strategies to diversify revenue streams, reflecting a cautious approach in a competitive market [10] Alibaba - Alibaba has shown impressive performance year-to-date, particularly in cloud services and AI, with its QN model gaining traction [13][15] - The company is well-diversified, allowing it to leverage growth in cloud services while navigating a challenging consumer environment [15][16] - Alibaba's advancements in AI, particularly in applications resembling ChatGPT, position it favorably in the tech landscape [18] Tencent - Tencent experienced a 43% surge in international gaming revenue and a market valuation increase of $280 billion over the past year [20] - The company has seen a 21% increase in AI-enabled advertising targeting, indicating effective integration of AI into existing revenue channels [20][21] - Tencent's cautious approach to AI investment, focusing on integration rather than heavy infrastructure spending, sets it apart from competitors [21]