#AlibabaAIDilution

$TAO #Anthropic plans to publicly file IPO documents by the end of August, fundraising may match SpaceX Currently solidifying its position as the leader in decentralized AI, it has risen along with Bitcoin's recent surge, but whether future actual revenue can offset token release remains an important issue. AI narrative and capital refocus: As traditional tech markets and the crypto community renew their interest in AI computing power #BTC77KFlowTest #Gold4600VsBonds #SamsungPayoutUpTo80B

Anthropic's bankers are telling potential investors that it may raise over $100 billion in its initial public offering at a valuation of $2 trillion, exceeding SpaceX and making it the largest IPO of all time.

UBS now models the AI infrastructure buildout reaching ~$4.1T of hyperscaler capex from 2026-2028 which is more than 3x what was spent over the previous six years combined: Cumulative 3-year capex: • $GOOGL ~$938B • $META ~$683B • $MSFT ~$672B • $AMZN ~$628B • $SPCX ~$335B • $ORCL ~$276B • $CRWV ~$130B • $NBIS ~$93B That scale shows how the largest cloud platforms are going all-in on building the new AI economy as Amazon, Google and Microsoft are expected to spend ~102% of cloud revenue on capex in 2026 followed by ~99% in 2027 and ~94% in 2028 effectively reinvesting nearly every dollar of cloud revenue back into infrastructure for three straight years. And while the growth rate slows after 2026, the spending itself keeps climbing to a record ~$1.6T by 2028 as SpaceX and the neoclouds add entirely new pools of demand which is what makes this more than another capex cycle since AI infrastructure is resetting the industry's long-term spending base several times higher.

Alibaba $BABA plans a $10.2B share sale offering 710M shares at a 3.6% discount to fund its full-stack AI expansion! KEY HIGHLIGHTS: Offering 710M shares at a discount to accelerate AI infrastructure development Backing its expansion with $153.9B in total revenue and $14.6B in EBITDA Massive operational scale counterbalanced by a modest 7% net margin THE RATING: Modest net margin metrics balance against massive AI scale, keeping the Seeking Alpha Quant score for $BABA at a HOLD.

🚨 ALIBABA DROPS 10% 📉 🇨🇳 Alibaba shares plunged 10% in Hong Kong after the company announced a $10.2B discounted share offering. The capital will fuel its AI expansion, but aggressive AI spending has already sent quarterly profits down 75% YoY. #AlibabaAIDilution #DailyOrbit

Breakingviews - Alibaba's $10 bln share sale starts AI countdown

Alibaba Stock Falls as Share Issue Exposes Cost of Chinese AI

Alibaba shares tumble as investors question whether AI spending splurge is justified

I have so many thoughts on the $BABA placement. So this will be a long one. 1) $BABA's share placement is historic. For context, the company has never done a share placement in its history. $BABA was already profitable and cash flow generative from Day 1 of its ADR listing. A feat that not many tech companies (then and more so now) can claim. $BABA has only raised money in its US and HK IPO. So you can imagine how monumental this is. 2) Near-term price upside will be capped. $BABA’s existing cohort of investors didn't buy $BABA for a capex cycle. $BABA investors are largely GARPy (e.g. Burry). They like the company for its i) moat (it being in the Chinese person’s everyday life - Taobao, Amap, Dingtalk, Qwen, etc), ii) cash flow generation (~US$7-10bn per year), iii) cheapness (mid-teens multiples) and iv) growth (mid-teens %). It will take time for existing investors to digest what is going on, get out and new ones to come in. Until then, I don’t expect BABA to outperform. 3) The Bull Case (but still far away) - T-Head and Cloud. T-Head (平头哥, is BABA’s chip business, it makes CPUs, accelerators). $BABA has previously discussed listing its Cloud as well as T-Head but ran into some hiccups (US chip controls, etc). That said, this quarter they just merged the two into one reporting segment. It could be a signpost towards gluing the two together for some sort of future spin-off. However, it is probably still ways down the line, as a business with that many related party transactions facing headwinds from US sanctions against chips is unlikely to enjoy favorable public market valuations. Side Note on Risk Management: $BABA is a CLASSIC example of why you need diversification and risk management in your portfolio. Even a company like BABA that has more than a decade of history of not raising more capital has done so and significantly changed the investment of the stock. This can easily happen to any other name and its not within your control. $BABA is still a 5% position for me. The cash flow generation profile is certainly dented but its still very cheap relative to its growth and moat. What remains to be seen is how much ROIC management can derive from the AI capex. If the cited 2.5 year payback period is true then this is highly accretive. The US$10bn raise can easily contribute >$3bn of EBITDA if those guided numbers are correct. However, the market is likely in a “wait-and-see” mode with many existing GARP investors likely to exit before then. Given its a 5% position, I’m comfortable sitting in it and potentially accumulating more as it goes lower, might consider selling puts on the back of that view as well. Like I said, most funds/institutional investors do not have the luxury of that (patience) but retail investors like us, make full use of that.

Alibaba’s planned HKD80B share placement buys something strategically valuable: time. Issuing 710M shares, about 3.6% of enlarged capital, can fund full-stack AI infrastructure without adding debt costs, but it also shifts execution risk directly onto existing holders. The key tension is not whether AI demand exists. Last quarter, AI cloud and compute revenue rose 45%, while capex increased 75% and net profit fell about 75%. That gap makes cash conversion the metric that matters. If AI revenue scales into profit and cash quickly, the dilution may look disciplined; if not, it becomes an expensive bridge to a still-distant payoff. Not advice, just analysis. #AlibabaAIDilution