1. Alibaba plans 380bn yuan for AI and cloud; exceeds decade-long spending. 2. Investors worry high capex will pressure margins; ADRs dropped before US open. 3. Similar spending concerns hurt AMZN and GOOGL; BABA faces near-term volatility.
Alibaba’s unprecedented 380bn yuan capex may erode profit margins, triggering investor sell-offs. Similar aggressive spending by tech peers like AMZN and GOOGL historically led to short-term price declines.
The massive AI and cloud spending plan is unprecedented and pivotal, likely straining margins and affecting investor sentiment in the near term.
The immediate stock drop and investor anxiety indicate a short-term impact, despite potential long-term growth from AI investments.