Evaporated 1 trillion! Alibaba, once again plunged into chaos

Ask AI · Can AI storytelling offset the negative impact of a cash-flow crash?

In just two months, the stock price has plunged by one-third. Investors holding Alibaba are frozen to the bone.

When earnings are released, Alibaba is once again dropping hard

Since the end of January, Alibaba’s stock price has been in a one-way slide. The company released its 2026 fiscal third-quarter financial report—which corresponds to the fourth quarter of the calendar year 2025. The specific figures are as follows.

Revenue: For the quarter, revenue came in at 284.43 billion yuan, up 2% year over year. If you exclude divested businesses such as Freshippo and Intime Retail (Yintai), revenue on a comparable basis grew 9% year over year.

Profit: Operating profit was 10.645 billion yuan, down 74% year over year. Net profit attributable to ordinary shareholders was 16.322 billion yuan, down 67%. Adjusted net profit was 16.71 billion yuan, also down 67%.

Cash flow: Net cash flow from operating activities was 36.032 billion yuan, down 49%. Free cash flow was 11.346 billion yuan, down 71%.

It’s clear that Alibaba’s earnings show the characteristics of slight revenue growth, alongside a cliff-like decline in net profit and cash flow.

The reason behind this earnings picture is “the impact of investment in the quick commerce business”—in other words, the food-delivery war that intensified Alibaba’s cash burn.

Once this kind of earnings report came out, Alibaba’s stock price immediately plunged.

After the U.S. stock market opened on the night of March 19, Alibaba opened sharply lower and closed down more than 7%. In a single night, it wiped out nearly $23 billion, or roughly RMB 160 billion.

On March 20, Alibaba in Hong Kong stocks followed with another drop of more than 6%. On March 23, it fell by more than 3% again.

People say that Hong Kong stocks are currently extremely difficult to trade. The “three giants of delivery” led by Alibaba launched a price war, causing cash-flow hemorrhaging—this is precisely an important reason why Hong Kong stocks, especially the Hang Seng Tech Index, have been sliding relentlessly.

Since the end of January, Alibaba has fallen from 174.2 Hong Kong dollars at one point to 117.7 Hong Kong dollars. In less than two months, the decline has reached 32.4%, wiping out more than 1 trillion Hong Kong dollars.

The more it intensifies the delivery war, the more Alibaba’s stock falls?

So far this year, Meituan has fallen from 96.65 Hong Kong dollars at one point to 65.3 Hong Kong dollars, with the decline also at 32.4%. JD.com has fallen from 120.4 Hong Kong dollars to 95.9 Hong Kong dollars, a drop of more than 20%.

The big sell-off of the “delivery” three giants—Alibaba, Meituan, and JD.com—essentially reflects market concerns that their profit model of “burning money to buy market share” may be unsustainable, and deep worries about how companies can withstand risks after suffering a major depletion of cash flow.

In quick commerce, Alibaba is willing to spend. In the reported quarter, sales and marketing expenses totaled 71.9 billion yuan—nearly 30 billion yuan more than the same period last year. As a share of the company’s revenue, this jumped from 15.2% to 25.3%. In this line of business, Alibaba has poured money into user coupons for Taobao Flash Sale, merchant subsidies, and riders’ delivery fees.

Of course, spending can be effective. In the quarter, Taobao Flash Sale revenue surged 56% to 20.8 billion yuan, but profit before interest, taxes, depreciation, and amortization (EBITDA) recorded a loss of 21.1 billion yuan.

Many investors believe Alibaba is essentially “losing money to gain attention.” Even if subsidies can buy revenue growth, once the subsidies are stopped, won’t market share be lost immediately? This kind of model that appears to lack quality in organic growth seems to have already been voted down by capital markets with their feet.

Alibaba’s approach to burning money on delivery to build revenue scale seems likely to continue. At the earnings call, the company’s management reiterated that it will maintain a target for overall quick-commerce GMV of over 1 trillion yuan in fiscal year 2028, and it expects overall profitability in fiscal year 2029.

If Alibaba is determined to burn money in quick commerce until it turns profitable, then it will need to burn for another three years—an enormous test for cash flow.

And this could also have a continuing impact on the stock price.

Looking back at Alibaba’s “delivery war,” it likely began from late April 2025 to early May.

On April 30, Alibaba announced that Taobao’s “hourly delivery” business would be officially upgraded to “Taobao Flash Sale.” This signaled that Alibaba would no longer rely solely on the Ele.me app for a lone battle, but would mobilize Taobao—one of its most core traffic gateways—to directly take part.

On May 6, “Taobao Flash Sale” was rolled out nationwide in full. Alibaba unleashed its “50 billion yuan subsidy” move, aiming to quickly seize market share.

On June 23, Alibaba announced that Ele.me and Fliggy would be merged into Alibaba China’s e-commerce business group. This marked that local life services would be directly commanded by the core e-commerce business of Taobao.

On July 5, Alibaba launched the 100-day Flash Sale growth plan, attempting to drive massive order surges every Saturday, creating a brand-new mass promotion timing point similar to “Double 11” and “618.”

And it was exactly from early May to early July—the peak period of Alibaba’s price war in quick commerce—that its stock price showed a clear pullback, dropping from around 130 Hong Kong dollars to around 100 Hong Kong dollars.

With AI storytelling continuing, does this time stop working?

In fact, Alibaba isn’t only burning money in quick commerce; it has also spent heavily on AI and cloud businesses.

In February 2025, Alibaba announced that over the next three years (2025 to 2027), it would invest more than 380 billion yuan in cloud and AI hardware infrastructure, including data centers, computing power networks, and hardware equipment. This set an investment record in China’s private enterprises for AI infrastructure.

At the time, this news caused Alibaba’s stock price to surge.

At the end of August 2025, according to media reports, Alibaba’s self-developed new-generation AI chip entered the testing stage. The chip is produced by local companies and is compatible with the NVIDIA architecture, focusing on AI inference tasks. This means Alibaba has a “backup” on computing power, and may even break free from dependence on overseas supply chains. The news strongly boosted the market’s confidence in Alibaba’s technological autonomy.

At the 2025 Yunqi Conference in September, Wu Yongming mentioned the 380 billion yuan investment again and said that because industry demand exceeded expectations, Alibaba planned to add even more spending beyond the 380 billion yuan baseline, further stepping up AI infrastructure construction.

In mid-September 2025, Jack Ma appeared at the Alibaba park. His presence was widely interpreted by the market as a strong signal that management stability was improving and internal cohesion was strengthening.

With these events, Alibaba’s stock price rose dramatically from around 115 Hong Kong dollars at the end of August all the way up to 186 Hong Kong dollars in early October—still in a one-way surge.

Riding on “AI storytelling,” Alibaba’s stock price jumped more than 60% in the short term. At that time, Alibaba’s market cap even returned to the 3 trillion Hong Kong dollar range, and its gain for the year was close to 100%—arguably a rare “spotlight moment” in recent years.

The two red arrows in the chart below represent Alibaba’s increases in February 2025 and September 2025—both driven by market excitement triggered by AI, which fueled a sharp stock rally.

Clearly, the capital market was giving positive feedback to Alibaba for spending heavily on AI, and its attitude was vastly different from its stance toward the “delivery war.”

Back then, the market realized Alibaba is no longer just an e-commerce company, but an AI tech giant with full-stack capabilities.

Alibaba’s extremely high capital expenditure on cloud and AI infrastructure made the market see its determination to comprehensively benchmark against U.S. tech giants. The market then started to value Alibaba using a logic associated with tech stocks rather than e-commerce stocks.

Over the past two months, Alibaba has fallen horribly again. This isn’t because the “AI storytelling” itself is no longer working. Instead, the market’s concerns about the massive near-term investment costs in its quick-commerce business and the rapid deterioration of its profitability have outweighed—overwhelmingly—any “AI storytelling” effects.

Recently, Alibaba has officially launched its first enterprise-grade AI agent, Accio Work, overseas. Alibaba’s DAMO Academy released its latest-generation flagship CPU, XuanTie C950.

As you can see, Alibaba’s breakthroughs in high technology are still continuing. But the key issue is no longer whether “Alibaba’s AI is any good,” but whether Alibaba can successfully transform AI’s technological advantages into sustainable, scalable profits before cash flow is consumed heavily.

Author statement: Personal opinion, for reference only