Alibaba has always had a lot of ambition. It dominated e-commerce for years, set the standard for digital infrastructure innovation, and represented China’s tech-driven ascent. However, it has changed recently, becoming more complicated, restless, and experimental.
The stock of BABA has increased by over 36% in the last year, bouncing back from the lows that followed Beijing’s crackdown on internet titans. Although positive, that rebound is accompanied by a changing financial profile. The corporation reported revenue of RMB 247.8 billion in the most recent quarter, a slight 5% gain, but the results report painted a different picture. The adjusted EBITDA margin dropped precipitously to 3.7%. That percentage was 17.4% one year prior.
| Metric | Value |
|---|---|
| Ticker | NYSE: BABA |
| Share Price | $158.73 |
| Market Cap | $378.95 Billion |
| P/E Ratio | 20.96 |
| 52-Week Range | $95.73 – $192.67 |
| Dividend Yield | 0.66% |
| Q2 FY2026 Revenue | RMB 247.8 Billion (+5% YoY) |
| Capex Q2 FY2026 | RMB 31.9 Billion (+80% YoY) |
| Adjusted EBITDA Margin | 3.7% (down from 17.4%) |
| Headquarters | Hangzhou, China / Hong Kong |
Spending, the driver?
Alibaba’s capital expenditures reached RMB 31.9 billion, an 80% increase from the previous year. The majority of that was allocated to the development of AI and cloud expansion, two areas on which the business is placing significant bets. It’s a serious bet. Alibaba anticipates investing at least RMB 380 billion in cloud infrastructure and artificial intelligence over the next three years. It has already consumed one-third of that so far.
This pivot has a lot on the line. One that seems both bold and essential.
Alibaba is strengthening its AI foundation in a number of ways through calculated investments. Its proprietary language paradigm, Qwen, has been included into important platforms including Alipay and Taobao. In the meantime, RynnBrain, its open-source robotics AI, is demonstrating promise in improving supply chain automation. These are future profit centers, if successful, not experimental showcases.
AI-related product lines have now had triple-digit growth for nine consecutive quarters, and the company’s Cloud Intelligence revenue increased 34% last quarter. That level of reliability is especially remarkable, given Alibaba’s ability to operate in a very unstable tech sector.
Investors are still hesitant.
After a poor earnings announcement, the shares fell more than 3% on February 13. Many observers were alarmed by the RMB 21.8 billion negative free cash flow, particularly considering the RMB 13.7 billion influx that was observed only a year earlier. When you combine that with a recent bearish block deal that involved 74,000 shares at a discount, the market is uncertain if Alibaba’s forward-looking strategy justifies its current cost structure.
Because of scale, early-stage firms can overlook capital burn. Alibaba, meanwhile, is not a new company.
Long a source of profitability, its primary commerce segment is growing more slowly. Although they are growing, the AI and cloud divisions are not yet making a significant profit. Investor patience is starting to be tried because of this time lag.
Last year, I recall reading Alibaba’s restructuring memo, which revealed the company’s division into six separate business areas. It seemed like a great attempt at the time to decentralize and compete more quickly. However, that proposal has been put on hold more recently. Market hesitancy and regulatory red tape have prevented spinoffs from taking off. The conglomerate vibe has reappeared in the absence of that structural clarity.
Nevertheless, underlying the clamor lies resiliency.
Alibaba’s platforms continue to have a significant influence on Chinese consumers’ purchasing habits. Millions of businesses are still supported by its digital infrastructure, logistics division, and banking services. Even in cases when short-term figures fall short, that type of scale is remarkably resilient.
Furthermore, despite its high cost, the company’s AI approach is progressive. The hype isn’t being chased. It is developing multi-platform, vertically integrated, and proprietary data-based long-term capability. That is a significant distinction from businesses that only lease compute power from American hyperscalers or plug in third-party models.
Alibaba has the unique capacity to test and improve its technology in actual consumer settings by utilizing its ecosystem. Compared to tech colleagues who are more compartmentalized, that is especially inventive.
It must still be executed precisely, though. Profitability cannot continue to be an afterthought. The current valuation, which is centered around a forward P/E of 17.5, might not hold if margins continue to be pinched and free cash flow keeps declining.
There is tension in the short term. However, it’s also educational.
Alibaba is rushing into the future rather than running away from it. Not in silence, either. The amount of RMB 380 billion is a lot. This also applies to its incorporation of AI techniques into everyday items. The balance this drama must achieve, however, between patience and ambition, between experimentation and financial discipline, is what makes it worthwhile to watch.
The focus will shift to revenue conversion in the upcoming months. Will AI tools increase Taobao engagement? Will margin loss be outpaced by cloud adoption? Will capital expenditures result in cash flows?
Those are still unanswered questions.
But there is no denying that Alibaba continues to rank among the most structurally important businesses in Asia’s tech sector. Its reach cannot be denied, even as it operates with tighter margins and under increased scrutiny. Additionally, its readiness to adjust, even at great expense, indicates that a business is not only responding but also changing.
