Core Viewpoint - Alibaba is experiencing a turnaround driven by strong growth in its e-commerce and cloud computing segments, with shares up nearly 60% year-to-date [1] Group 1: Cloud Computing - Alibaba's cloud computing revenue grew 26% to nearly $4.7 billion, with AI product revenue more than doubling for the eighth consecutive quarter [3] - The adjusted EBITA for the cloud segment also increased by 26% to $412 million [3] - The company is developing a new AI chip for inference and plans to invest $53 billion in AI over the next three years [4] Group 2: E-commerce Business - Alibaba's e-commerce segment revenue grew 10% year-over-year to $19.6 billion, with third-party business revenue also rising 10% [7] - The quick-commerce revenue increased by 13%, although profitability was impacted with segment EBITA declining 21% to $5.4 billion [7] - The company is focusing on quick commerce, with monthly active users reaching 300 million, a 200% increase since April [8] Group 3: International Commerce - The international commerce segment (AIDC), including AliExpress, saw revenue jump 19% to $4.9 billion, with a significant improvement in EBITA losses [9] Group 4: Financial Performance - Overall revenue increased 2% to $34.6 billion, but was up 10% when excluding dispositions; adjusted EBITA fell 14% to $5.4 billion [10] - Operating cash flow decreased by 39% to $2.9 billion, while free cash flow was an outflow of $2.6 billion due to heavy investments in data center infrastructure [10] - The company ended the quarter with $52.3 billion in cash and short-term investments and $32.3 billion in debt [11] Group 5: Future Prospects - Despite mixed overall numbers, strong revenue momentum in e-commerce and cloud computing has excited investors, positioning Alibaba as a leader in Chinese AI [12] - The company's investments in quick commerce and improvements in AIDC profitability are expected to drive long-term growth [13] - The stock trades at a forward P/E ratio of about 13 times fiscal 2026 estimates, indicating it remains an attractive investment opportunity [14]

Key Takeaways Alibaba posted Q1 revenues of $34.6B, up 2% year over year and slightly above consensus estimates.Earnings fell 10% Y/Y and missed estimates as strategic spending cut into profitability.Earnings fell 10% Y/Y and missed estimates as strategic spending cut into profitability.Alibaba (BABA) reported non-GAAP earnings of $2.06 per ADS in the first quarter of fiscal 2026, which lagged the Zacks Consensus Estimate by 3.29%. In domestic currency, the company reported earnings of RMB 14.75, down 10% y ...

Core Viewpoint - Both Alibaba and Amazon are leveraging artificial intelligence (AI) to enhance growth in their cloud computing and e-commerce sectors, with Alibaba focusing on a turnaround strategy and Amazon emphasizing operational efficiency [1]. Alibaba - Alibaba is investing heavily in its core e-commerce platforms, Tmall and Taobao, to boost gross merchandise volume (GMV) growth, resulting in a 9% year-over-year increase in e-commerce revenue and a 12% rise in third-party revenue [3]. - The Cloud Intelligence segment of Alibaba saw an 18% year-over-year revenue increase, with AI-related revenue more than doubling for the seventh consecutive quarter, and adjusted EBITA surged by 69% [4]. - Alibaba's AI initiatives are driven by its Qwen series of models, including the latest Qwen3, which combines traditional large language model capabilities with advanced reasoning [5]. - The international commerce segment (AIDC), which includes AliExpress and Trendyol, grew revenue by 22% last quarter, with expectations of profitability within the next year [6]. - Alibaba's stock trades at approximately 12 times forward earnings, with nearly $20 billion in net cash and $57 billion in equity investments, indicating significant upside potential if sentiment around Chinese equities improves [7]. Amazon - Amazon is characterized by relentless operational execution, with its market cap at $2 trillion, continuously finding ways to increase revenue and margins [8]. - Amazon Web Services (AWS) remains a key growth driver, with revenue increasing by 17% year-over-year to $29.3 billion, and operating income growing by 23%, largely due to AI demand [9]. - AI is being integrated across Amazon's ecosystem, enhancing efficiencies in warehouses, logistics, and e-commerce, leading to improved operating leverage [10][11]. - Amazon's North American revenue rose 8% in Q1, with operating income increasing by 16%, indicating strong performance as AI initiatives are still in early stages [11]. - Amazon trades at a forward P/E of 34.5 times, which is significantly higher than Alibaba's valuation [11]. Investment Perspective - Alibaba presents more potential upside due to its successful turnaround in e-commerce, leadership in AI within China, and growth prospects in the AIDC business, all while trading at a discount to Amazon [12]. - Amazon is viewed as the safer investment option, with a proven track record of operational success and willingness to invest for long-term gains, despite facing typical retail risks [13]. - For investors seeking higher potential returns, Alibaba is recommended, while Amazon offers a more stable risk-reward profile [14].

Core Viewpoint - Alibaba's stock has had a strong start to 2025, up approximately 45% year-to-date, despite a disappointing fiscal fourth-quarter earnings report [1] E-commerce Business - Alibaba's e-commerce segment, which includes Tmall and Taobao, is crucial to its operations and has shown signs of recovery after facing challenges from a weak Chinese economy and competition from Pinduoduo [4][5] - In fiscal 2025 Q4, e-commerce revenue grew 9% year-over-year to $14 billion, with a notable 12% growth in its third-party business [6] - The e-commerce segment's EBITA increased by 8% to $5.8 billion, indicating profitable growth, with strong new customer acquisition and a rise in orders [7] - The company is investing in "instant commerce" to deliver items within an hour, targeting a potential market of 1 billion consumers [8] Cloud Computing Segment - The cloud-computing segment experienced an 18% revenue growth in the quarter, reaching $4.2 billion, with AI products gaining broader adoption [9] - Adjusted EBITA for the cloud segment surged 69% to $333 million, reflecting strong operational leverage [9] Overall Financial Performance - Alibaba's total revenue increased by 7% to $32.6 billion, while adjusted EBITA rose 36% to $4.5 billion [11] - Adjusted earnings per American depositary share climbed 23% to $1.73, and operating cash flow increased by 18% to $3.8 billion [11] - Free cash flow saw a significant decline of 76% to $516 million due to heavy investments in data center infrastructure, but the company generated $10.2 billion in free cash flow for the fiscal year [11] Balance Sheet and Future Outlook - As of the end of the quarter, Alibaba had $51.6 billion in cash and short-term investments, $31.8 billion in debt, and $56.6 billion in equity and other investments [12] - The company is focused on turning its international commerce segment profitable, which could enhance overall profitability [10][14] - With a forward price-to-earnings ratio of around 12 times fiscal 2026 estimates, the stock is considered a good buying opportunity despite not being as cheap as in the previous year [15]

Core Insights - Alibaba, Tencent, and JD.com reported earnings reflecting improved Chinese consumer spending and the benefits of artificial intelligence in advertising [1] Group 1: Alibaba - Alibaba's Taobao and Tmall group sales rose by 9% year on year to 101.37 billion yuan ($13.97 billion) for the three months ended March 31, exceeding the predicted 97.94 billion yuan [2] - Marketing revenue for Alibaba grew 12% year on year to nearly $10 billion, aided by the use of AI tools to enhance marketing efficiency [16] - Despite positive sales figures, Alibaba's overall profit was about half of analysts' expectations, leading to a 7.6% drop in shares during U.S. trading [17] Group 2: JD.com - JD.com reported a 16.3% increase in revenue from its retail business to 263.85 billion yuan for the three months ended March 31, surpassing the predicted 226.84 billion yuan [8] - Sales in electronics and home appliances surged by 17% year on year, supported by China's trade-in subsidies [7] - JD's marketing revenues climbed by 15.7% to 22.32 billion yuan, partly due to AI tools enhancing ad conversion rates [13][14] Group 3: Tencent - Tencent's "fintech and business services" segment saw a 5% year-on-year revenue increase to 54.9 billion yuan in the first quarter [9] - Marketing services revenue for Tencent surged by 20% to 31.9 billion yuan, driven by strong advertiser demand for short videos and content on WeChat [10] - AI advancements have improved Tencent's click-through rates for ads to nearly 3%, a significant increase from historical rates of 0.1% for banner ads and around 1% for feed ads [11] Group 4: Market Context - The earnings reports reflect a period before the escalation of U.S.-China trade tensions in April, which introduced new tariffs [4] - A Morgan Stanley survey indicated consumer confidence fell to a 2.5-year low, with 44% of respondents concerned about job losses, impacting spending expectations [18] - Analysts predict that as trade tensions ease, consumption will rise, and related stimulus policies may focus on boosting spending in various sectors [5][20]

Core Viewpoint - The U.S. stock market is under pressure, but the ADRs of Chinese stocks, particularly Alibaba, are gaining traction with significant potential for further upside [1] Group 1: AI Leadership - Alibaba is a leader in artificial intelligence (AI), with its Qwen 2.5 model outperforming competitors including DeepSeek and U.S. firms like Meta Platforms and OpenAI [2] - The company has launched over 100 task-specific open-source AI models, including those for mathematics and coding, and introduced a new AI assistant powered by its QwQ-32B AI reasoning model [3] - Revenue from Alibaba's Cloud Intelligence segment grew 13% last quarter, with AI-related revenue more than doubling and segment-adjusted EBITDA increasing by 33% [4] - Partnerships with major tech companies, such as Apple using Alibaba's AI model for its Apple Intelligence solution in China, highlight Alibaba's growing influence in the AI space [5] Group 2: E-commerce Recovery - Alibaba is showing signs of recovery in its core e-commerce business, which includes Tmall and Taobao, after facing challenges from a sluggish Chinese economy and competition [6][7] - Investments in the e-commerce segment have led to a 9% increase in third-party revenue and a 5% rise in overall segment revenue last quarter, with segment EBITDA up by 2% [8] Group 3: Emerging Business Growth - Alibaba's International commerce segment (AIDC) is expanding rapidly, with a 32% revenue increase last quarter, although it currently has a negative EBITDA of $678 million [9][10] - Management anticipates that the AIDC segment will achieve profitability within the next fiscal year, which would significantly enhance the company's earnings growth [10] Group 4: Stock Valuation - Despite a 60% increase in share price year-to-date, Alibaba's stock is still attractively valued, trading at a forward P/E ratio of about 15 for fiscal 2026, which is approximately half that of Amazon [11][12] - The company holds $23.1 billion in cash and short-term investments, along with $47.4 billion in equity and other investments, representing over 20% of its market cap [12] - There is potential for Alibaba to accelerate revenue and earnings growth, making it a compelling investment opportunity [13]

With the market pulling back, it's time to go bargain-hunting and find some cheap stocks. It's a good reminder that markets will go up and down, but stocks tend to outperform over the long run.Let's look at three cheap stocks investors can start to dip their toes in and buy now with a small investment. I own all three.AlibabaWhile Alibaba (BABA -1.35%) hasn't been suffering in this market sell-off, the Chinese e-commerce and cloud computing giant is still one of the cheapest stocks around. The stock trades ...

Alibaba (BABA -1.82%) shares got a nice boost following the Chinese company's fiscal third-quarter results, which showed a nice rebound in its e-commerce business as well as strong artificial intelligence (AI) growth.The stock has had a tough past five years, losing about a third of its value, but it has been rallying lately. The stock is now up about 70% year to date and has nearly doubled over the past year as of this writing.Let's take a closer look at Alibaba's most recent earnings to see if the stock's ...