Alibaba (BABA) Stock Drops 7% on 75% Capex Surge

Alibaba (BABA) saw a 7% drop, trading at $121.17, following a 75% surge in capital expenditures (capex) to 67.68 billion yuan ($10.1 billion), resulting in a free cash flow outflow of 44.7 billion yuan. Despite this, the company reported a 45% growth in AI cloud and compute services revenue, totaling 48.44 billion yuan ($7.2 billion). Year-to-date, BABA shares are down 10%, and analysts note that Alibaba's heavy capex raises concerns about its profitability amid significant spending on AI. This situation highlights the risks for investors regarding cash flow management in high-growth sectors.