BABA - Alibaba

Chinese stocks supported by state fund buying and AI hype; recent uptrend and big money trade.

Bullish bias due to pre-earnings optimism, improved profitability, cloud revenue growth, and legal win; weak correlation to broader market.

Up 11% on pre-earnings optimism, UBS estimates 45% cloud revenue growth, and judge blocked Pentagon designation. Asymmetric opportunity near $95 support.

Beaten down but strong FCF ($21B 5-year avg). Conservative 5% revenue growth assumption still yields 21.5% return. Lawsuits and AI competition are noise.

Management does not prioritize shareholder returns; massive AI capex and low-margin quick commerce investments are crushing profitability and free cash flow. Operating margins have fallen to zero. Forward P/E has expanded from 8 to 14 as earnings declined, so the stock is not as cheap as it appears. No clear positive catalyst exists. The company prioritizes government relations and 100-year business longevity over shareholder value.

Host personally owns Alibaba and agrees with Burry adding to the position. Chinese e-commerce giant beaten down for years due to regulatory and geopolitical concerns. Host argues these concerns have 'always been there' and news follows the stock price. Spending heavily on AI. DCF middle target $225 vs $107 current represents 20% IRR. Number one company in China.

Featured as the big money trade of the day — a trader bought $3.38M worth of deep in-the-money $85 strike calls expiring June 2027. Host likes the risk/reward, noting deep ITM calls have good intrinsic value with manageable time decay. Management confirmed triple-digit AI revenue growth YoY. Chinese stocks are deeply out of favor (down 68% from ATH of ~$319), presenting a potential turnaround opportunity.

Sold position after 7 years. Chinese government intervention risk, VIE structure means you don't truly own shares. Growth decelerated, free cash flow now negative, burning cash on AI capex and grocery competition. Management constantly apologizing with no change. Zero visibility. Extremely patient investors may hold, but Christophe is out.

Listed among 18 stocks near intrinsic value with potential for 9%+ returns over 10 years. No detailed analysis provided.

Host is building up his position again after losing shares to covered calls. He sees Alibaba as a long-term China play with strong AI cloud growth (triple-digit rates, 5.5B annualized AI revenue). Stock pulled back from $190 to $125 while underlying business strengthens. Stock analyzer shows middle price of $190-224 with potential 17.5% annual return. CEO announced new AI chip 3x more powerful than previous one.