On August 20, Alibaba fell 3.2% in pre-market trading, trading at $123.25/share, with turnover of $29.08 million. The decline comes as the company publishes its FY2027 Q1 earnings before market open, with investors focused on whether massive AI capital expenditures can translate into actual profit growth.

Institutional forecasts projected earnings per share to decline approximately 36.5% year-over-year this quarter. The previous quarter's adjusted EBITA had already fallen 84% due to heavy AI investment. Analysts noted that Alibaba's cash flow through fiscal year 2027 is unlikely to cover the enormous AI and cloud infrastructure spending. The options market also reflected bearish sentiment, with a $300,000 out-of-the-money put position targeting $124 strike price expiring August 21.

While the company disclosed cloud external revenue growth accelerating to 45% with AI-related products achieving triple-digit growth, year-to-date stock performance remains down approximately 13%, reflecting persistent investor concerns over the profitability timeline of its AI transformation strategy.

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