A Big Week for Alibaba and China Tech

Cloud, capex, margins, and a very important week for China tech.

Big week for China tech.

Alibaba and Tencent both report Wednesday morning, then Trump heads to Beijing Thursday and Friday to sit down with Xi. Earnings from the two largest China internet names and a US-China summit, all within 48 hours. There’s going to be a lot to digest.

I’m focusing on Alibaba because it’s the name I know best and the one I have the most conviction in heading into the print. Tencent and the summit will bleed into the broader read across China tech, but Alibaba is the one I care about most here.

And thankfully, Alibaba decided to report like a normal public company this time…

Last quarter was a bit ridiculous. The December quarter ended December 31st and Alibaba didn’t report until March 19th. The prior three December quarters were reported on February 7th, February 20th, and February 23rd. So for reasons nobody bothered to explain, investors got to sit around for an extra month waiting on stale numbers while the next quarter was already basically underway.

Very cool.

This time, the date went up on April 29th, about six weeks after quarter-end. I don’t know who found the calendar over there, but I appreciate the effort.

Anyway, jokes aside, this is an important print.

The stock is sitting around $140 after running all the way to $193 and then getting smoked back down toward the lower end of its 52-week range.

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Consensus is looking for revenue around RMB 246.5 billion and EPS near $0.90, which implies adjusted earnings down roughly 50% year-over-year.

So yes, the headline P&L is probably going to look ugly. No, I don’t really care.

The reason Alibaba has been beat up is not Cloud. Cloud has been working. The problem has been the quick commerce investment cycle and the margin compression that came with it. So for this print, I’m mostly watching whether the things that actually pulled the stock down are starting to turn.

Last quarter, Cloud grew 36%, quick commerce grew 56%, like-for-like revenue grew 9% excluding disposed businesses, and adjusted EBITA fell 57%.

The market saw the margin pressure and crushed the stock. I saw a business still investing aggressively into areas that could matter a lot more over the next few years, and I’ve repositioned pretty aggressively since.

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Cloud

Consensus is around 40%. I think that’s about right and I personally expect roughly 41-43%.

The number I care about more is pricing.

Right before the last earnings call, Alibaba raised pricing across several AI computing and storage products. T-Head AI computing cards were raised by 5-34%, while Cloud Parallel File Storage pricing was raised by 30%. Tencent, Baidu, and Zhipu have also been pushing pricing higher across parts of the AI stack, while ByteDance is increasingly monetizing Doubao usage instead of just giving everything away.

That is a key part I don’t think people are paying enough attention to.