BABA Stock: buy, sell, or just another analyst game?
Alibaba's "AI WeChat" Dreams: Delusional or Genius?
So, Alibaba thinks it can build the next WeChat with AI? Give me a break. First, they rebrand their existing AI crap into something called "Qwen," and suddenly, bam, 10 million downloads in a week? Yeah, right. I'm sure half of those are just bots trying to get in on the hype.
Analysts are already drooling over this, calling it China's AI-era WeChat. Analysts, man. They're always so quick to jump on the bandwagon. It's like they're paid by the word or something. Look, Tencent already is WeChat. You think people are just gonna ditch that for some Alibaba knock-off just 'cause it has a shiny new AI sticker slapped on it?
And sure, Alibaba's New Qwen App Smashes 10 Million Downloads In A Week — And Sends Its Stock Soaring: Analysts See Clear Path To China's Next AI-Era WeChat - Alibaba Gr Hldgs (NYSE:BABA), Apple (NASDAQ:AAPL) Alibaba's stock jumped 5% after this "news." Big deal. That's like celebrating a participation trophy. The real test is whether this Qwen thing actually sticks around longer than my last diet. I mean, didn't they try this before with the Tongyi app and Quark browser? How'd that work out? Oh, right.
Let's be real: this smells like desperation. Alibaba sees everyone else making bank on AI—Nvidia, Microsoft, even frickin' Google—and they're scrambling to grab a piece of the pie. But throwing together some half-baked AI app and calling it the future ain't gonna cut it.
They're touting triple-digit growth in AI-related cloud revenue. Okay, cool. But what about the rest of the business? Bank of America cut their price target, even though they still say it's a "buy." Contradictory much? They blame "softer near-term growth in e-commerce." Translation: people ain't buying as much crap from Alibaba anymore.
And get this: they’re increasing spending on AI, cloud, and quick commerce. Quick commerce? Is that even a thing? It sounds like something I'd accidentally order while drunk on the internet. Offcourse, their cloud business is growing, up 34% year-over-year, according to that BofA report. Maybe there's something there, I don't know.
The Cloud: Alibaba's Only Hope?
Speaking of the cloud, that seems to be the only thing keeping Alibaba afloat these days. Joyce Ju at Bank of America is practically drooling over it, saying AI demand is growing fast. She expects cloud revenue to stay on a "fast growth track." Well, duh. Everyone's throwing money at AI right now. It's the new gold rush.
But here's the thing: how much of that AI revenue is actually profitable? Alibaba is pouring cash into this stuff. Their adjusted diluted EPS was below expectations. Cash flow is down. So, they're spending more to make less? That's not exactly a recipe for success.
And what about the competition? This Qwen app is supposedly battling it out with "low-cost challengers" like DeepSeek. A cost battle? Great. That means everyone's gonna be slashing prices, and Alibaba's already struggling with margins. This is a bad idea. No wait, "bad" doesn't cover it - this is a five-alarm dumpster fire.
Then again, maybe I'm the crazy one here. Maybe Qwen will become the next WeChat. Maybe Alibaba will dominate the AI landscape. Maybe pigs will fly.
E-commerce Weakness: The Elephant in the Room
Let's not forget the elephant in the room: Alibaba's e-commerce business is slowing down. Customer management revenue is expected to weaken. That's where they make most of their money, right? So, if that's tanking, all the AI hype in the world ain't gonna save them.
They can dress it up with fancy AI apps and cloud services, but at the end of the day, Alibaba is still an e-commerce company. And if people aren't buying stuff, the whole house of cards comes crashing down.
BofA's analyst reduced earnings forecasts by 7% to 20% through FY28. Ouch. That's not exactly a vote of confidence. Sure, she says it's not a "long-term issue." But let's be real, who knows what's gonna happen in five years? Five years ago, we were all wearing masks and hoarding toilet paper.