Shares of Alibaba-W (09988) fell nearly 4% in the afternoon session, declining by 3.87% to HKD 126.8 at the time of reporting, with a trading volume of HKD 8.413 billion. The movement follows the company's announcement of a sharp profit drop for the fourth quarter of the 2026 fiscal year and increased pressure on cash flow. Alibaba's CEO, Wu Yongming, indicated during the earnings conference that the company's capital expenditures over the next three years are expected to significantly exceed the previously anticipated RMB 380 billion. Notably, Goldman Sachs had already revised its forecast upward last year, projecting Alibaba's total capital expenditures for fiscal years 2026 to 2028 to reach approximately RMB 460 billion. According to Jinyuan Securities, Alibaba's substantial increase in future capital spending signals a strategic shift in its AI development, moving from a "technology exploration" phase to a "infrastructure-first" approach. In the short term, elevated depreciation expenses and investment cash outflows are likely to continue weighing on Alibaba's profitability, with this pressure expected to persist through the 2027 fiscal year and potentially into the first half of the 2028 fiscal year. However, from a medium- to long-term perspective, this investment is viewed as a necessary step for Alibaba to rebuild its commercial competitive advantages.
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