Alibaba reports a 75% drop in quarterly net profit as it accelerates AI capex, betting on enterprise cloud and AI model services for long-term growth.

Revenue improves 9% year over year for the April-June quarter, driven by robust demand for cloud services and AI workloads.

Higher spend is linked to fluctuations in procurement cycles, increased CPU compute capacity, and pricier chip components.

Despite weaker profitability, several analysts maintain Outperform and Buy ratings, citing strong cloud growth as a positive backdrop.

The upcoming program hints at future segments, including an interview with Vlad Tenev of Robinhood on prediction markets and exploration of humanoid robot markets.

Regulatory action around Ant Group and broader China sentiment are cited as key risks keeping the valuation gap in place.

Analysts emphasize Alibaba’s undervalued narrative rests on compound revenue growth, expanding margins, and a premium tech multiple, while regulatory and sentiment headwinds persist.

The stock trades near $128.90 with mixed momentum: a negative 1-month return, negative year-to-date performance, and positive 1-year TSR, reflecting cautious near-term sentiment.

AI gains have yet to fully offset softer monetization in core commerce, with core margins under watch as AI investments scale.

Benchmark analyst sees upside from AI cloud growth, improving margins, and narrowing losses in Quick Commerce and AI applications.

Alibaba’s stock underperforms the Hang Seng Tech index, highlighting broader market dynamics in the sector.

Looking ahead, operating cash flow may improve if delivery competition eases, but heavy capex on chips, data centers, and AI could offset near-term gains.