Alibaba’s net income fell 75% as AI-driven capex surged, prompting Michael Burry to predict another 50% downside.
Alibaba’s net income plunged 75% to 10.5 billion yuan in the June quarter as capital expenditures surged 75%, swinging free cash flow to a 45 billion yuan outflow. The company reported revenue growth of 9% to 269 billion yuan, but rising AI infrastructure costs weighed on profitability.
Alibaba is raising $10.2 billion through a 3.7% dilutive share sale to fund further AI investments, while insider purchases by executives Tsai and Wu totaled just $15 million. The stock has fallen roughly 40% from its January high amid weaker consumer demand and competitive pressures in China.
Hedge fund manager Michael Burry, who exited Alibaba for JD.com months ago, said the stock must drop another 50% before he would consider re-entering. The company’s AI spending spree has failed to generate recurring revenue, leaving investors skeptical of its near-term outlook.