Alibaba's AI Hype Train: Are We Really Buying This?
Alright, let's cut the crap. Alibaba's stock is up, everyone's patting themselves on the back, and the headlines are screaming about AI-driven cloud growth. But are we really, really buying this? I mean, come on.
The company's second-quarter revenue rose 5%, and they're bragging about a 34% jump in Cloud Intelligence Group revenue. Okay, cool. But adjusted net income dropped from RMB 36.52 billion to RMB 10.35 billion. So, they’re making more money, but keeping less? Something ain't adding up.
The AI Smoke and Mirrors
CEO Eddie Wu is yapping about "significant strategic investments" and "strong growth." He even claims AI-related product revenue has achieved triple-digit year-over-year growth for the ninth consecutive quarter. Triple-digit growth? For nine quarters straight? Give me a break. What are they selling, miracle cures powered by algorithms?
And then there's CFO Toby Xu, who says they're "re-investing our profits and free cash flow for the future." Translation: "We're burning cash like a California wildfire on AI and cloud infrastructure, and hoping something sticks." They've deployed approximately RMB120 billion in capital expenditure toward AI and cloud infrastructure. That’s a hell of a lot of money. Are they building Skynet? Because that’s about the only thing that justifies that kind of spending. Or maybe they just want to compete with NVDA and AMD? Offcourse, everyone wants a piece of that AI pie.
Quick Commerce, Slow Profits?
They're also touting improvements in their quick commerce business. Higher fulfillment logistics efficiency, strong customer retention, rising average order value... it all sounds fantastic. But if it's so great, why aren't those profits soaring? Why are they still "re-investing" everything?
Here's a thought: maybe, just maybe, all this AI hype is a desperate attempt to distract us from the fact that their core e-commerce business is facing some serious headwinds. They onboarded offline stores from nearly 3,500 Tmall brands to the quick commerce business as of October 31, 2025. So what? Are people suddenly going to abandon Amazon and go all-in on Tmall because of faster delivery of… what, exactly? Expiring snacks?
Retail Investors: Easily Fooled?
Alibaba’s ticker was the top third-trending one on Stocktwits. Retail sentiment on Alibaba jumped to ‘bullish’ territory from ‘extremely bearish’ a day ago, with message volumes at ‘high’ levels, according to data from Stocktwits. Seriously? A few positive headlines and suddenly everyone's bullish? Maybe I'm missing something, or maybe the average retail investor has the memory of a goldfish. According to BABA Stock Rises Pre-Market As AI-Driven Cloud Growth Drives Revenue Beat, AI-driven cloud growth is a major factor in the stock's performance.
Shares of Alibaba have gained nearly 90% this year. 90%! That's insane. Is it justified? I don't know. Maybe I'm just a grumpy old cynic who refuses to believe in anything anymore. Then again, maybe everyone else is drinking the Kool-Aid.
So, What's the Real Story Here?
This whole thing smells like a carefully orchestrated PR campaign designed to pump up the baba stock price. Are they doing impressive things with AI? Maybe. Are they on the verge of world domination? Absolutely not. I'm not buying it, and neither should you.