Alibaba Shares Give Up Qwen Gains as Market Focus Turns to Cloud Margins

HONG KONG, July 27, 2026, 03:07 HKT — Trading has ended for the day.

Alibaba Group (NYSE:BABA; HKG:9988) ended the week with gains from its Qwen surge wiped out. The company’s U.S. ADR settled at $112.14 on Friday, marking a 2.5% drop over the week. Shares in Hong Kong declined 4.3% to HK$110.00.

The turnaround is significant as Monday saw a 4.7% surge after the Qwen3.8-Max preview. Over the subsequent four sessions, shares fell 6.8% from Monday’s close. The $8.20 drop was 53% greater than the earlier $5.37 increase.

Volume highlighted the conviction divide. Monday trades reached 14.75 million ADRs, about 10% higher than the 50-day average. By contrast, retreat sessions saw 8.0 million traded on average, or 41% below that average. The data points to waning follow-through rather than panic-driven sell-offs.

Other companies in the sector showed more resilience. JD.com NASDAQ:JD rose 1.9% over the week. PDD Holdings NASDAQ:PDD dropped 1.8%, a smaller decrease compared to Alibaba.

U.S.-listed stock	July 17 close	July 24 close	Weekly move	July 20	July 21–24
Alibaba ADR	$114.97	$112.14	-2.5%	+4.7%	-6.8%
JD.com ADR	$29.62	$30.19	+1.9%	+3.3%	-1.3%
PDD Holdings	$84.14	$82.66	-1.8%	+2.3%	-3.9%

Reported closing prices form the basis of the calculations.

Alibaba states that Qwen3.8-Max contains 2.4 trillion parameters. The preview can be accessed via Model Studio and Alibaba’s coding platforms. However, for investors, model size is not the key commercial metric.

Cloud faces a tougher challenge. The division’s revenue increased by 38% to 41.63 billion yuan in the latest quarter. AI offerings contributed 30% of cloud sales to external clients.

Expenses continue to weigh. Adjusted EBITA dropped 84% as Alibaba invested in technology and rapid commerce initiatives. The group now anticipates its AI spending will surpass its previous 380 billion yuan commitment over three years.

Chief Executive Eddie Wu stated that the investments had started to yield commercial returns. He predicted that cloud margins would rise in the next one or two quarters. That outlook has taken on greater significance than the latest record in another metric.

Commerce shows little evidence of a strong recovery in demand. Early figures from Syntun indicate China’s 618 festival generated 863.6 billion yuan in GMV, only slightly higher than the 855.6 billion yuan recorded in the previous year. Tmall retained the top position, with JD.com following.

The broader market decline on Friday weighed on sentiment, with the Nasdaq slipping 0.6% amid investor concerns about significant AI investments ahead of upcoming U.S. megacap earnings. Alibaba recorded an even steeper drop.

Upcoming tests are imminent. The Federal Reserve holds its meeting on Tuesday and Wednesday. China will release its official July PMI on Friday at 9:30 a.m. local time.

Risks are present in both directions. Robust standalone Qwen outcomes might revive the trade. Quicker increases in cloud margins would also provide a boost. Conversely, ongoing investment in AI and logistics could push back profit timelines.

Currently, cloud margin remains the key figure. Last week, model size gave Alibaba a temporary boost, but it failed to sustain buyer interest.

TS2 TECH • EXTENDED COVERAGE

Further analysis

Editorial insight

What was the closing level for Alibaba shares, and what information does the chart display?

BABA ended Friday at $112.14, down 1.68% in the session. The ADR declined 2.5% over the week, even after a 4.7% gain on Monday. Shares are still trading 16.8% higher than the June 30 close but remain 41.8% under the October 2025 peak. Trading volume on Friday was 6.9 million, roughly half the 50-day average.

Has Qwen3.8 established a sustained catalyst for AI?

Alibaba has introduced Qwen3.8 Max, an AI model with 2.4 trillion parameters. According to the company, only Anthropic’s Fable 5 surpasses its performance—a ranking based on Alibaba’s internal analysis, not external assessment. Shares of BABA ended Monday at $120.34 and fell for four sessions straight. Alibaba intends to offer an open-weight release, though it has not announced a schedule. Investors will be watching for proof that interest in the model translates into revenue from cloud services.

What is the real strength of Alibaba Cloud’s growth?

Cloud revenue for the March quarter increased 38% to RMB41.63 billion, marking Alibaba’s strongest growth among major segments. External cloud revenue grew by 40%, maintaining the unit’s recent acceleration. Revenue from AI-related products hit RMB8.97 billion, accounting for 30% of external sales, with that segment posting triple-digit gains for the eleventh quarter in a row. Cloud adjusted EBITA rose 57% to RMB3.80 billion, despite increased spending.

Is Alibaba able to support AI investment without hurting shareholder value?

Alibaba reported a 3% rise in March-quarter revenue to RMB243.38 billion, but adjusted EBITA dropped 84%. The quarter saw a free cash flow outflow of RMB17.30 billion. For the full year, capital expenditure totaled RMB126.06 billion, approximately $18.28 billion. Management notes that its three-year AI spending will surpass the initially planned RMB380 billion. As of the end of March, cash and liquid investments stood at RMB520.82 billion, or $75.50 billion. While liquidity is strong, returns on investment remain unclear.

Is rapid commerce boosting growth or eroding margins?

Quick-commerce revenue surged 57% to RMB19.99 billion in the March quarter. Overall China e-commerce revenue increased 6%, although core e-commerce revenue slipped 1%. Adjusted EBITA for China e-commerce declined 40% to RMB24.01 billion. Management noted improvements in unit economics and average order values quarter-on-quarter. However, Alibaba did not provide a specific profit figure for quick commerce. The strategy continues to prioritize growth despite the significant costs.

When will Alibaba release its next earnings report?

Alibaba has yet to release the date of its next quarterly earnings report. The investor-relations webpage lists no upcoming company event. Some external calendars suggest August 28 as a potential date, though they note it remains unconfirmed. As of July 26, no official earnings release was scheduled for this week. Market focus next turns to cloud growth, quick-commerce losses and free cash flow.

Is BABA trading at a low price at $112?

BABA is priced at $112.14, equating to about 17.6 times its fiscal-year GAAP earnings per ADS. When measured by non-GAAP earnings, the multiple climbs to approximately 28.8 times. As of the end of March, Alibaba’s cash and liquid investment holdings totaled $75.50 billion. The annual dividend of $1.05 represents a yield of nearly 0.9% based on Friday’s closing price. Notably, GAAP profit was significantly boosted by equity investment gains. Non-GAAP earnings for the full year declined 59%, making any straightforward value case less convincing. The shares do not look clearly cheap.

What regulatory challenges might impact Alibaba in the near future?

In June, the Pentagon placed Alibaba on its list of Chinese military companies. While the move blocks direct Pentagon purchasing, restrictions on indirect procurement will take effect in 2027. Alibaba contests any links to the military and has filed a lawsuit seeking removal from the list. The classification stops short of imposing comprehensive financial sanctions. Meanwhile, China is weighing stricter AI export rules that could include model weights. Those measures are still in draft form, and Reuters was unable to independently confirm specifics. Separately, a $600 million settlement closed a U.S. drug-sales probe.