Alibaba Shares Slide as Investors Question Cost of AI Push

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Despite unveiling a major expansion of its artificial intelligence capabilities, Alibaba Group saw its stock price decline sharply at the end of the week. The Chinese e-commerce leader’s deep integration of its "Qwen" AI model across its core platforms failed to impress the market, triggering a sell-off as investors focused on the strategy's substantial costs.

The market’s response followed Alibaba’s confirmation on Friday that its Qwen AI agent is now fully operational within key services including Taobao, Alipay, and Amap. This move represents a significant upgrade, transforming the system from a basic chatbot into an actionable assistant capable of executing orders and processing payments directly within a chat interface.

Nevertheless, the announcement was met with selling pressure. Shares closed the week down 3.93 percent at 141.80 euros. Elevated trading volume suggested that market participants engaged in classic profit-taking, capitalizing on the news after a remarkable 77 percent surge in the stock's value over the preceding twelve months.

Mixed Analyst Sentiment

Financial experts offered a divided assessment of the strategic shift, balancing technological praise with profitability concerns:

• Analysts at Morgan Stanley viewed the integration as a critical move toward creating an "AI super-app," arguing that Alibaba’s closed ecosystem provides a distinct competitive edge.
• CICC pointed to the Cloud Intelligence Group as a new growth engine, citing the division's robust expansion in the most recent quarter.
• Nomura struck a more cautious tone, actually lowering its price target on the stock. Its analysts expressed lingering concerns about e-commerce monetization rates, which they feel are not fully offset by advances in AI.

Institutional activity underscores the prevailing skepticism. Data shows that Oversea Chinese Banking Corp slashed its position in Alibaba by more than 88 percent during the third quarter.

The Price of Ambition

A primary source of investor hesitation is the immense capital expenditure required for this strategic pivot. Alibaba has committed to investing approximately $53 billion in AI infrastructure over the coming two to three years. While this secures long-term competitiveness and is already boosting revenue from AI products, the near-term effect is a margin squeeze on the company's core business operations.

All attention now turns to the upcoming quarterly earnings, anticipated around February 19. Management faces the critical task of demonstrating that these new AI functionalities are genuinely driving transaction volumes rather than remaining merely technical showcases. Should they fail to provide convincing evidence, the current pressure on key chart support levels is likely to persist.