To The Moon

The impending release of Alibaba's FY2026 Q2 earnings on November 25th is a moment of high tension and pivotal importance for the company and its investors, myself included. While the Bloomberg analyst consensus shows a modest 4% YoY revenue increase to RMB 245.16 billion, the projected sharp drop in profitability, with adjusted net profit expected to fall by 63% and EPS by a staggering 90% to $0.24, is certainly concerning. This reflects the intense competitive pressures in the Chinese e-commerce space and, more crucially, the substantial investment cycle the company is currently undergoing, particularly in its growth areas. My primary focus will not be on whether they "beat" a low bar on profit, but on the narrative management and the outlook for future margin expansion.

I believe the market scrutiny on overall revenue growth, the progress of Taobao Flash Deals, and developments in the cloud business is absolutely correct, as these represent the path to Alibaba's future value creation. My expectation for the Taobao Flash Deals investments is a mixed but ultimately positive one. The massive investment in instant retail is compressing margins now, but search results suggest it's already generating significant synergies, driving new highs in active consumers and daily order volumes. This transformation into a "local-life" commerce platform is a necessary defensive and offensive move against competitors. Meanwhile, I am keenly watching the Cloud Intelligence Group, where I need to see continued acceleration, bolstered by AI-related revenue, to validate its position as the key long-term growth engine.

Regarding the stock price, the question of whether $150 is a good bargain to add is complex, especially given the stock's recent weakness after hitting $192. My analysis suggests that $150 sits near the low end of recent analyst price targets and technical support levels. If I use a longer-term valuation perspective, current discounted cash flow (DCF) models suggest the stock might be trading near its intrinsic value or potentially overvalued at current levels, but the Price-to-Earnings (P/E) ratio looks reasonable compared to peers. Given the market's focus on future growth and the current heavy investment phase, I view $150 as a relatively opportunistic entry point for a long-term investor who is confident in the execution of the new growth strategy, despite the near-term volatility.

The development of Alibaba's Qwen Large Language Model (LLM) family, and the newly launched Qwen APP, is perhaps the most exciting part of this story. I view Qwen as a strategic asset that has the potential to become the "operating system of the AI era" in China and a leading global open-source model. Its tight integration across the Alibaba ecosystem—from enabling agents in Taobao to driving growth in Alibaba Cloud—is a significant competitive advantage. The commitment to a massive RMB 380 billion investment in AI infrastructure signals management's confidence and strategic pivot toward being a technology-first company, which I find highly encouraging, even if it is the main driver of the near-term margin pressure.

In conclusion, I approach these earnings with cautious optimism. I fully anticipate the numbers to look ugly on the bottom line due to the necessary, strategic, and heavy investments in cloud, AI (Qwen), and Taobao's instant retail. Therefore, I will prioritize management's commentary and guidance on the pace of these investments and the traction they are generating, rather than dwelling on the one-time quarter's profit miss. Success for Alibaba in this critical period is measured not by short-term EPS, but by demonstrating clear, credible progress toward establishing a defensible position in the high-growth areas of Cloud, AI, and hyper-local commerce. $Alibaba(09988)$  $Alibaba(BABA)$  

As a retail investor, I focus mainly on the US and Singapore markets, combining a mix of technical trading and long-term investing strategies. I enjoy analyzing charts, spotting patterns, and making calculated moves based on both market sentiment and fundamentals. While I'm not a professional, I treat my portfolio seriously and continue to learn and grow with each trade. If you're also navigating the markets and enjoy discussing stocks, options, or market trends, feel free to follow me. Let's learn and grow together as a community.

@Tiger_comments  @TigerStars