Michael Burry Boosts Alibaba Stake, Calls It China's 'Most Advanced' AI Company — BABA Stock Still Stuck In The Mud

• Burry believes BABA remains undervalued, with buybacks boosting shareholder value despite limited market recognition. 
• While its cloud and AI businesses posted strong growth, Alibaba’s planned $56 billion AI spending is weighing on profits. 
• Alibaba stock has declined 23% year-to-date. 

Alibaba Group (BABA) drew investors’ attention late Sunday as Michael Burry, the investor best known for predicting the U.S. housing market collapse ahead of the 2008 financial crisis, reinforced his bullish stance on the Chinese technology giant by revealing that he has increased his position.

Burry Praises BABA's AI Positioning

In his latest Substack post, Burry disclosed that he recently increased his stake in Alibaba, purchasing additional shares at $111.90. He described Alibaba as a leader in China's AI strategy. 

“I added to Alibaba (BABA) at $111.90. It is the most advanced company in China as far as AI strategy goes, and it has been buying back stock,” said Burry. 

Another factor supporting his investment thesis is Alibaba's ongoing stock repurchase program. Burry indicated that the company's buybacks continue to increase the value attributable to existing shareholders, even though the stock market has yet to fully reflect those benefits in the share price.

“The stock is well-off recent highs. When the time comes, the stock will launch fast and fly high,” added Burry. 

His comments suggest he remains focused on identifying undervalued businesses that generate cash and return capital to shareholders while much of the market remains concentrated on AI-related themes.

Alibaba Group stock traded over 1% lower overnight, heading into Monday. 

BABA’s AI Infrastructure Push 

Alibaba has been ramping up its transformation from an e-commerce heavyweight into one of the world's largest AI infrastructure players, committing billions of dollars to cloud computing, semiconductor development and AI model deployment as it seeks a larger role in the next phase of the technology race.

The company's fiscal first-quarter (Q1) results highlighted rapid expansion across its cloud and AI operations, including a sharp increase in Cloud Intelligence Group revenue and continued triple-digit growth in AI-related products. 

However, Alibaba’s plan to spend RMB380 billion ($56 billion) on AI over the next three years is putting pressure on profits and cash flow. Q1 adjusted earnings per American Depositary Share (ADS) of RMB 0.62 ($0.091) declined 95% year-on-year.  

BABA Retail Traders’ View 

On Stocktwits, retail sentiment around the stock shifted to ‘neutral’ from ‘bearish’ territory the previous day with a 156% rise in message volume over the past 24 hours. 

A user said, “Alibaba trades at a forward price-to-earnings ratio of 17, meaning investors are paying $17 for every dollar of earnings expected in the next year. The figure for Amazon, which runs a similar collection of businesses, is a pricier 27. "We view Alibaba as a global AI winner," Morgan Stanley wrote in a recent note.

Another user said, “After holding for 4 years.. I think it’s time to sell this. Terrible.”

BABA stock has slumped 23% year-to-date. 

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