Investors penalize BABA after a 75% capex jump erases free cash flow despite 45% cloud segment growth.
Alibaba (BABA) stock fell 7% to $121.17 after reporting a 75% surge in capital expenditures, flipping free cash flow to a 45 billion yuan outflow. The spending overshadowed 45% year-over-year growth in its cloud business, signaling heavy investment in AI infrastructure.
The company has already deployed half of its 380 billion yuan three-year AI commitment, suggesting sustained capex pressure. Peers like Baidu (BIDU) rose 2% to $93.98, interpreting Alibaba’s cloud growth as demand validation without matching costs.
Other Chinese internet stocks showed muted reactions, with PDD Holdings (PDD) down 1% to $88.74 and JD.com (JD) unchanged at $29.46. The move reflects an Alibaba-specific repricing rather than a broader sector selloff.