阿里巴巴

Alibaba announced a new HKD 80 billion ordinary share placement at HKD 112.70 per share, a 3.6% discount to the US close price on Friday, to fund artificial intelligence investment. Shares fell 9% in Monday's Hong Kong session.

Why it matters: Although Alibaba is placing shares below our fair value estimate, it is not materially destroying value at this price. The share sales alone would cut our fair value estimate by 1.4%. The equity raise improves Alibaba's funding mix and lowers balance sheet risk. Alibaba already tapped debt for the AI buildout, and debt has to be repaid whether the spending pays off or not. But risk management doesn't mean doubt about AI returns—if so, it wouldn't raise capital to invest. Long-term investors and insiders find the shares attractive. The book was oversubscribed nearly three times within one hour of launch at a small discount, with 40% going to long-only and sovereign funds. Chairman Tsai and CEO Wu bought HKD 120 million of stock after the shares slumped.

The bottom line: We trimmed our fair value estimate for wide-moat Alibaba by 3% to HKD 201 per share and USD 207 per ADS, as we no longer assume share buybacks below the fair value estimate amid rising cash needs to fund AI capex. We continue to view Alibaba's shares as undervalued. We still think the market is underestimating Alibaba's long-term opportunities in AI cloud. We think the market is more focused on near-term earnings, which are pressured by losses in the on-demand delivery business. As Alibaba demonstrates its ability to reduce losses during fiscal 2027-28 and turn this business profitable in fiscal 2029, we think the share price will rise toward our fair value estimate.

We trimmed our fair value estimate for wide-moat Alibaba by 3% to HKD 201 per share and USD 207 per ADS, as we no longer assume share buybacks below the fair value estimate amid rising cash needs to fund AI capital expenditure.

We expect Alibaba’s ratio of China retail marketplace gross merchandise volume to China’s retail sales of consumer goods to continue to decline in the next decade. Considering intensive competition, we assume monetization of the China retail marketplace to be flattish after an increase due to the rollout of Quanzhantui, software fees, and quick commerce.

Our forecast 10-year compound annual growth rate for total revenue is 8%. We assume 10-year revenue CAGRs of 4% in the China e-commerce segment, 6% in international digital commerce, and 24% in cloud intelligence. Our 10-year adjusted EBITA CAGR estimate is 21% as we expect a turnaround of loss-making businesses and rising cloud margins to offset the negative impact from defending market share in China e-commerce.

We maintain our wide economic moat rating for Alibaba, underpinned by its powerful network effect in the domestic e-commerce business, which generates a vast majority of the group’s adjusted EBITA. It had over 900 million monthly active users in the first half of 2026, the highest among e-commerce platforms, as per QuestMobile. The platform’s value to consumers rises with more sellers, and vice versa, creating a self-reinforcing cycle. Alibaba continues to command the highest share of gross merchandise volume in China despite competition. We estimate Alibaba had 37% GMV share in July 2026.

Alibaba remains a core marketplace for Chinese consumers thanks to its vast range of stock-keeping units, operational expertise in product and merchant governance, consumer protection, and comprehensive merchant tools that support the full product lifecycle. Its scale provides merchants with predictability in sales and production volumes, which lowers production costs and enables long-term planning. Unlike most peers, Alibaba has built solutions across diverse consumption scenarios—including quick commerce (on-demand delivery), online-to-offline, offline, and content-driven commerce—ensuring relevance in China’s increasingly complex retail landscape. Specifically, we think quick commerce is gradually taking share from traditional e-commerce. While current investments in scaling this business weigh on margins and ROIC, we view them as necessary for Alibaba to secure its long term position in online retail in China. We expect ROIC to exceed WACC in the long run.

Content-driven e-commerce from platforms like Kuaishou and Douyin is gaining popularity, but we view it more as a supplement than a substitute. Livestreaming and short-video commerce tend to drive impulse purchases, which carry higher return and refund ratios and greater sales volatility than traditional e-commerce. This impulse-driven nature makes it difficult for merchants to rely on these channels exclusively, as unpredictable sales volumes hinder production planning and economies of scale. Established brands therefore continue to depend on mainstream platforms like Alibaba, which underpins our expectations that Alibaba is more likely than not to maintain its moat for 20 years.

Successful livestreaming also requires significant resources and expertise, which not all merchants possess. Uncertain sales volume, combined with higher return rates, limits its viability as a sole channel.

Anticompetitive exclusivity arrangements between merchants and Alibaba represent an ESG risk. We have already incorporated expected GMV share loss to other platforms into our forecasts, and Alibaba’s entrenched network effect continues to provide durable competitive advantage.

Alibaba Cloud was the largest cloud infrastructure-as-a-service provider by revenue in Asia Pacific, with regional market share of 22.5% in 2025, followed by Microsoft’s 18.3%. We do not currently rely on Alibaba Cloud as a source of the group moat. We have not assigned a moat to the rest of the business.

Alibaba is able to maintain or increase its gross merchandise volume share in China's e-commerce space, demonstrating its ability to execute its turnaround strategy.

Alibaba successfully increases key metrics such as customer retention, purchase frequency, and average order value, driving GMV growth to outperform the growth of China's online retail sales of physical goods.

Alibaba delivers better-than-expected adjusted EBITA margins despite competition and reinvestment.

Alibaba's GMV share in China decreases faster than we expect as competitors such as Douyin successfully enter the search-based e-commerce business.

Expansion into the nonphysical goods marketplace businesses and other regions leads to lower-than-expected margins, and the timing of profitability is delayed.

Alibaba fails in its globalization, public cloud, and artificial intelligence efforts and delivers slower-than-expected earnings growth.