Alibaba Group

Alibaba is no longer just an e-commerce stock. Economically, it is a combination of: Chinese trading platforms and advertising/merchant services, quick commerce and local services, international e-commerce, cloud and AI infrastructure, logistics, media, healthcare, and other holdings.

Alibaba's core businesses in Chinese e-commerce and cloud services offer strong competitive positions due to real economies of scale, yet the group's historical profitability is currently barely visible. While the cloud division is developing into an economically highly relevant value driver with 45% growth and twelve consecutive quarters of triple-digit growth in AI products, massive Capex investments in cloud and AI infrastructure, as well as high expenditures in quick commerce, are weighing on earnings. This leads to a negative TTM free cash flow of approximately -72.5 billion RMB. Although the solid liquidity position protects the company against insolvency risks, these funds are not fully available as free surplus, as they are largely tied up in the announced 380 billion RMB investment program. At a current share price of 108.84 USD, Alibaba offers a decent risk-reward ratio; however, due to structural uncertainties—such as the VIE structure, governance issues, general China risks, and uncertainties regarding capital allocation—the margin of safety necessary for an entry remains absent.

Cloud is growing at 45%, while AI products have seen triple-digit growth for twelve quarters; this value driver is economically relevant.

The platform effects are real. The moat is primarily based on the enormous user and merchant base, network effects, extensive trade data, and the integration of e-commerce, advertising, logistics, payment systems, and cloud infrastructure. This scale and integration are difficult to replicate fully.