Sam Badawi
Stock Analyst, Creator of Origins of Alpha & Quarterly Conviction
Alibaba's Qwen could become a massive consumer AI usage story through distribution on iPhones in China. Alibaba just released Qwen 3.8 Omni Flash, and Qwen is positioned to support Apple Intelligence in China as coming iPhone cycles become increasingly AI-focused. Moonshot's Kimi K3 may beat Qwen on some reasoning and coding benchmarks, but getting into millions of iPhones is a distribution advantage that lifts Qwen beyond benchmark competition. x.com
Alibaba's stock lacks a push higher because its EPS growth is contracting rather than accelerating, and price follows the rate of change in EPS. After its $10.2B equity raise, Moomoo's Fundamental Engine shows diluted EPS growth contracted in three of the last four quarters, including a 78.41% year-over-year drop in the latest. That explains the missing post-earnings move toward $160, and Bernstein's cut to a $165 target makes that path harder near term. x.com
Alibaba is the cleanest public-market bet that Chinese AI labs are innovating rather than just distilling, and that cheaper models drive more usage. If China is innovating, Qwen drives Alibaba Cloud share; if Jevons paradox holds, Alibaba captures the spend across models, compute, data, chips and apps. AI products are already 30% of Alibaba Cloud's external revenue, above a $5B run rate, and the commerce cash engine can carry it through the capex/revenue mismatch. x.com
Alibaba looks like a decent buy as its narrative improves after Chinese AI model releases. Per Bloomberg, relayed by @StockMKTNewz, Alibaba launched a preview of its flagship Qwen3.8 Max, which it describes as comparable to leading frontier models and second only to Anthropic's Fable 5. x.com x.com
Alibaba is tough to hold because it is splitting investment between e-commerce and AI, creating massive execution risk. AI is so capex-hungry that, as Western examples show, Alibaba cannot spread spending and still reach comparable results. The market sees China e-commerce spending, including the quick-commerce race, as having no ROI, and is right. Replies argue Alibaba has no choice; it might still make it, but the risk is that its AI push slows. x.com x.com x.com
Alibaba looks solid for a long-term hold heading into earnings, after missing the last four times. Qwen is integrated with iPhones in China and is the most downloaded AI model, Alibaba runs Asia's largest cloud, it launched a new Alipay platform and it sold Lingxi Games for $2B. A miss and drop like Baidu's would be a chance to add. x.com
Alibaba and Baidu stand to benefit because China will not slow its AI development even if the US slows its own. x.com
Anthropic's accusation that Alibaba's Qwen lab distilled its frontier models is optically bearish for Alibaba, though no penalties have been enforced. Per Anthropic, the lab used thousands of fake accounts and over 28.8 million exchanges. While penalties are absent, the rewards outweigh the risks for Alibaba if distillation lifts Qwen's market share, as many US AI startups already use Qwen for its cost-effectiveness versus Gemini and others. x.com x.com
Alibaba's Qwen models look able to beat costlier US AI: two weeks of testing showed no difference from US AI agents, at 80% less per token. US companies spending hundreds of billions and driving up compute costs risk losing the battle to cheaper Chinese models. A selloff to the low $100s would be a chance to buy much more. x.com
Alibaba is a contrarian trade because accelerating demand for relatively cheaper compute is very underappreciated, and China's cloud market is still in its infancy versus the US. Alibaba is a consensus short as upside from closed-source AI looks illusory. x.com x.com
Alibaba's full AI stack is not yet working economically: it loses $4 for every $1 of revenue, and that is the whole thesis risk. AI Labs lost RMB13.9B, cloud profit covers only 41% of that hole, and commerce is still funding the entire AI build. The cloud business works; the full AI stack does not yet. x.com
Apple's bull case is stronger than the bear case from higher memory prices, because 54% of iPhones will not support AI Siri. The motivation to buy a new device should outweigh price hikes. Fourth-quarter unit demand data is the thing to watch. x.com x.com
