Michael Burry Predicts Further Decline for Alibaba Amid AI Investment Struggles
Alibaba's financial performance has deteriorated sharply, with net income falling by 75% and free cash flow turning negative due to a surge in capital expenditures driven primarily by its AI infrastructure investments. Michael Burry, the investor known for his short position on mortgage-backed securities during the 2008 crisis, recently stated that Alibaba's stock must fall another 50% before he would consider buying it again. The company is raising $10.2 billion through a share sale at an 8.4% discount to its previous Hong Kong close, representing significant dilution for existing shareholders. The funds will be used entirely for AI and cloud infrastructure development. Despite some optimism around Alibaba's growing cloud revenue—up 45% year-over-year—the company has significantly reduced stock buybacks in favor of capital spending. Burry shifted his position from Alibaba to JD.com months ago, signaling a lack of confidence in the former’s near-term prospects.
Topics: AI investment Alibaba capital expenditures Michael Burry stock price decline