Alibaba Plunges 16.2% in 6 Months: 3 Key Reasons to Hold the Stock

Alibaba's AI Cloud revenues surged 45% year-over-year with AI products marking 12 consecutive quarters of triple-digit growth, supported by its full-stack AI strategy spanning proprietary chips and Qwen models. However, aggressive capital expenditure of RMB67.68 billion caused adjusted EBITA to fall 30% and free cash flow to turn negative. While existing investors should hold given strong fundamentals and a robust balance sheet of RMB474.5 billion, new investors should await a better entry point due to near-term margin pressures and premium valuation.