2024-02-01 05:21:27 ET
Summary
- I do not agree with two key arguments of the bear camp, including the narrative that Alibaba's failed cloud IPO is a dealbreaker for long-term investors.
- Alibaba Cloud has entered an aggressive investment phase to capture the AI opportunity, and there's reason to believe that the cloud business will benefit from being part of Alibaba Group.
- Recent Microsoft data suggests aggressive AI investments will lead to losses in the short term, another reason for the cloud business to seek the shelter of the profitable BABA.
- In this analysis, I will discuss the reasoning behind why I believe the failed cloud IPO is not a reason for investors to stop believing in Alibaba's investment appeal.
Alibaba Group Holding Limited ( BABA ) has disappointed investors ever since Founder Jack Ma's anti-government comments triggered a rift between the tech giant and Chinese policymakers back in 2020. Investors are divided on the prospects for Alibaba, and I represent the bulls. Although I acknowledge some of the arguments of bears, including the extensive time that it may take for Alibaba shares to unlock their true potential and the regulatory risks arising from policy inconsistencies, I do not agree with two key arguments of the bear camp....
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Alibaba: Demystifying The Failed Cloud Spinoff Narrative