Thinking of Buying Alibaba Stock Now? Here's 1 Green Flag and 1 Red Flag.

Alibaba's AI cloud and compute services are showing strong growth with 45% year-over-year revenue increase and 133% EBITA growth, demonstrating the business is becoming profitable. However, the company is spending heavily on AI infrastructure with capital expenditures surging 75% and free cash flow turning negative, requiring equity dilution through stock sales. The investment thesis hinges on whether these massive AI expenditures will generate attractive long-term returns.