[Update] Alibaba (BABA)
8x EV/EBITDA, 11x P/E, and FCF set to grow 30%+ annually—yet the market still won’t touch it.
Most people who follow me know that Alibaba is my largest position. I’ve written about it, tweeted about it, and defended it through some brutal drawdowns. And after yet another leg down in recent months, now feels like the right time to check back in.
Naturally, the day I go to publish this, Alibaba jumps 8% on news that the U.S. will allow Nvidia to resume chip sales to China — fueling a broad rally across Chinese tech, especially anything tied to AI. Funny timing. But the thesis hasn’t changed. If anything, it’s only gotten stronger.
Anyway, one day’s rally doesn’t change the bigger picture. The market may keep writing Alibaba off, but the business just keeps getting stronger. It’s not broken — far from it. The disconnect between fundamentals and sentiment has rarely been this wide. And that’s exactly why my conviction has never been higher.
Cloud is re-accelerating. AI is beginning to matter. Capital returns remain steady. And the weak macro backdrop in China (currently a headwind) could turn into a meaningful tailwind as stimulus kicks in and confidence rebounds.
Instant Delivery: Misunderstood by the Market
One of the biggest overhangs on Alibaba’s stock lately has been its push into the 30-minute, sub-hour delivery space. To many investors, it looks like another costly subsidy war—this time with Meituan and JD. But that misses the point. Alibaba’s strategy here isn’t about chasing short-term market share, it’s about protecting the long-term value of its e-commerce ecosystem.
Fast fulfillment is no longer optional in China’s major cities. JD made same-day delivery the norm for hard goods across much of the country, while Meituan trained consumers to expect food and daily essentials in under an hour. That’s the benchmark now. If Alibaba can’t consistently match those expectations, it risks losing relevance—especially with younger, high-frequency buyers.