Alibaba has unveiled its first comprehensive annual report since the partnership of Chairman Joseph Tsai and CEO Simon Wu.

The report indicates that Alibaba generated revenue of RMB 996.347 billion in fiscal year 2025, marking a 6% year-over-year increase. Under non-GAAP standards, the company recorded a net profit of RMB 158.122 billion, roughly flat compared to the RMB 157.479 billion reported in fiscal year 2024.

Following the earnings release, Alibaba's U.S. stocks plummeted by over 7% in a single day, erasing USD 24.21 billion (approximately RMB 174 billion) in market value. Notably, Alibaba Director and President John Michael Evans significantly reduced his holdings by 1.0941 million shares on May 16, realizing USD 135 million (approximately RMB 973 million).

Kuaima Finance Media has uncovered that investors' actions may be tied to the underperformance of Alibaba Cloud Intelligence Group, the cornerstone of Alibaba's AI strategy, in terms of growth rate and capital expenditure.

Behind the 18% Surge in Cloud Revenue

AI is undeniably emerging as Alibaba's most significant narrative. Leveraging Alibaba Cloud's Tongyi Qianwen, the company aims to integrate AI resources across various business lines, fostering a comprehensive AI transformation.

For instance, in December 2024, Simon Wu integrated Tongyi App into Alibaba's Intelligent Information Business Group, home to Quark, empowering the new Quark to evolve into an "AI Super Box" and introducing features such as "Deep Search." Additionally, Alibaba.com launched Accio, a native AI application for overseas buyers, empowering over one million enterprise users.

Furthermore, Gaode Maps introduced NaviAgent, the world's first map-based AI navigation agent, while Fliggy debuted the travel AI product "Ask." Ele.me introduced "Merchant AI Onboarding Assistant" and "Rider AI Assistant," and Cainiao has continued its expansion in "AI + Logistics."

In February 2025, to support Alibaba's comprehensive AI transformation, Simon Wu publicly announced an investment of RMB 380 billion over the next three years, significantly surpassing the total investment of the past decade, for the construction of cloud and AI hardware infrastructure.

However, the market has not recognized the performance delivered by Alibaba Cloud Intelligence Group following these concerted efforts. Data shows that in the fourth quarter of fiscal year 2025, Alibaba Cloud Intelligence Group achieved revenue of RMB 30.127 billion, a year-over-year increase of 18%, with AI-related product revenue experiencing triple-digit growth for seven consecutive quarters.

The crux lies in the "18%" growth rate. During the earnings call, Simon Wu elaborated on the growth rate of the intelligent cloud business, stating, "Due to factors such as the Spring Festival in January to March, many rhythms are not as even as in normal months, so the reference significance is not great. However, around the Spring Festival, we did observe a considerable number of new customer demands, mostly driven by inference applications or scenarios. In fact, the true large-scale demand may materialize in the following months."

In other words, during the 2025 Lunar New Year holiday period, the surge in AI demand fueled by the popularity of Deepseek and the continuous integration of large models across industries did not significantly bolster Alibaba Cloud's performance.

Apart from the growth rate being questioned, Alibaba's capital expenditure also "fell short." In the fourth quarter of fiscal year 2025, the market anticipated Alibaba's capital expenditure to reach RMB 35 billion, but the actual figure was only RMB 24.6 billion, more than 20% lower than the RMB 31.7 billion recorded in the third quarter of fiscal year 2025, and far from the "RMB 380 billion investment over three years" promised by Simon Wu.

However, as Simon Wu noted, the true large-scale demand for Alibaba Cloud may materialize in the coming months. In April 2025, Alibaba open-sourced the new-generation hybrid inference model Qwen3. By the end of April, Alibaba Tongyi had open-sourced over 200 models, with global downloads exceeding 300 million, and the number of Qwen-derived models surpassed 100,000, making it the world's largest open-source model family. Recently, industry leaders such as BMW and China Mobile have forged strategic cooperation with Alibaba in the AI domain.

Looking ahead, Simon Wu asserted that "customer demand for cloud and AI continues to grow, presenting a historic opportunity for the next ten to twenty years." Nonetheless, the impact of Alibaba Cloud's underperformance relative to market expectations may linger for some time.

Significant Disagreements in the Capital Market

Alibaba's capital expenditure in the fourth quarter of fiscal year 2025 falling short of expectations to some extent reflects insufficient confidence in the company's future prospects in the AI and cloud computing markets. This lack of confidence also implies that Alibaba's future revenue and profit growth rates may fall short of expectations.

This suggests that following a round of significant gains for Alibaba at the end of 2024 and the beginning of 2025, its valuation needs to be recalculated.

During this recalculation, Alibaba Group Director and President John Michael Evans (hereinafter referred to as "Evans") reduced his holdings by 1,094,074 shares on May 16, 2025, realizing approximately USD 135 million (approximately RMB 973 million).

Public information reveals that Evans earned a Bachelor's degree in Politics from Princeton University in 1981 and joined Goldman Sachs in 1993. In September 2014, Evans became a director of Alibaba and has served as president since August 2015.

In addition to Evans, SoftBank Group, Alibaba's most significant shareholder, conducted a "liquidation-style" reduction in holdings. Data indicates that as of December 31, 2024, SoftBank Group held 1.527 billion Alibaba shares, representing an 8% stake. However, as of March 31, 2025, the number of Alibaba shares held by SoftBank Group fell to 631 million, reducing its stake to 3.3%. In just three months, SoftBank Group reduced its Alibaba holdings by 896 million shares, transforming into a "regular small and medium shareholder" of Alibaba.

Moreover, hedge fund tycoon David Tepper's Appaloosa Management reduced its Alibaba holdings by 22%. Despite the reduction, among its top five holdings, Chinese stocks Alibaba, Pinduoduo, and JD.com remained listed.

Following the release of the financial report, the rating agency Jefferies downgraded Alibaba's U.S. stock price target to USD 156.

Conversely, some institutions and funds remain optimistic about Alibaba's AI layout and continue to increase their investments with "real money."

Data disclosed by the U.S. Securities and Exchange Commission shows that Ray Dalio's Bridgewater Associates, renowned as a "China expert," "aggressively bought" approximately 5.4 million Alibaba shares in the fourth quarter of fiscal year 2025, increasing its holdings from 255,000 shares to 5.66 million shares, a more than 21-fold increase. Following Bridgewater Associates' "aggressive buying," Alibaba became the fund's fourth-largest holding.

Meanwhile, Greenwoods Asset Management's subsidiary Greenwoods Hong Kong also purchased 601,100 Alibaba shares, with a holding market value of approximately USD 80 million (approximately RMB 570 million).

Choice data indicates that in the fourth quarter of fiscal year 2025, a total of 830 funds increased their holdings of approximately 120 million Alibaba Hong Kong shares, bringing their cumulative holdings to 630 million shares.

Amidst significant disagreements in the capital market, Alibaba's stock is poised to enter a prolonged period of volatility.