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S&P Global Ratings Foresees BABA-W to Keep Promising Net Cash despite Elevated Cloud & AI Investment
Recommend 15 Positive 25 Negative 3 |
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S&P Global Ratings (S&P) commented on BABA-W (09988.HK) (BABA.US) announcement to invest at least RMB380 billion in cloud computing and AI infrastructure over the next three years, noting that the plan is expected to negatively impact the group’s cash flow over the next 2-3 years. However, despite elevated capex in cloud and AI, Alibaba’s solid cash flow from its e-commerce business, potential proceeds from selling non-core assets, and reduced share buybacks, will enable the group to maintain a promising net cash position. S&P estimated Alibaba’s capex at RMB93 billion for FY2025, which may rise to RMB122 billion in FY2026, higher than its previous forecasts of RMB67-70 billion annually. This could lower the group’s adjusted free operating cash flow from RMB159 billion in FY2024 to a range of RMB66-86 billion in FY2025 and FY2026. Looking ahead, S&P anticipated Alibaba’s focus on enhancing user experience and optimizing merchant efficiency will drive a projected 7% revenue growth in FY2026, with EBITDA margin holding steady at around 20%. AAStocks Financial News |
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