Alibaba was the largest positive contributor to the fund in July, with its share price up nearly 30%. This performance was driven by the announcement of a powerful yet cheap new Chinese AI model, Kimi K3, which was trained using Alibaba’s cloud technology. The exceptional asymmetry on offer in many of the assets the fund currently holds means small changes in news flow or fundamentals can lead to outsize positive performance, highlighting Alibaba's strong position in the AI sector and its potential for future growth.

Alibaba was the largest positive contributor to the fund in July, with its share price up nearly 30%. This performance was driven by the company's cloud technology, which was utilized in the development of a powerful yet cheap new Chinese AI model, Kimi K3. The exceptional asymmetry on offer in many of the assets the fund currently holds means small changes in news flow or fundamentals can lead to outsize positive performance, highlighting Alibaba's strong position in the market.

Alibaba's quarterly results showed cloud revenue growth accelerating to 38% year-over-year, supported by increasing adoption of AI-related services. Management indicated that earnings headwinds are beginning to stabilize and that losses in quick commerce are improving as unit economics strengthen. Our conversations with the company suggest Alibaba's cloud position remains very well positioned, with enterprises continuing to demand full-stack services. Execution on core commerce is improving, and management's comprehensive AI strategy is beginning to show results. We remain confident in the improving execution in Alibaba’s core businesses and growing AI adoption.

Alibaba's quarterly results showed cloud revenue growth accelerating to 38% year-over-year, supported by increasing adoption of AI-related services. Management indicated that earnings headwinds are beginning to stabilize and that losses in quick commerce are improving as unit economics strengthen. Our conversations with the company suggest Alibaba's cloud position remains very well positioned, with enterprises continuing to demand full-stack services. Execution on core commerce is improving, market share is stabilizing, and management's comprehensive AI strategy is beginning to show results.

Despite a near-term earnings reset due to lower group profitability and negative free cash flow, our conviction in Alibaba remains intact. The company is ramping investment in AI infrastructure and has disclosed that its model-as-a-service run-rate revenue is expected to exceed RMB 30 billion by fiscal year end. This validates Alibaba's differentiated full-stack positioning across proprietary chips, cloud infrastructure, and leading models. We view Alibaba as one of the best-positioned proxies for China's AI supply chain and remain invested.

Alibaba faced a challenging quarter with a significant decline of 24%. The company is experiencing soft domestic retail spending and muted consumer confidence, which are weighing heavily on its market performance. The broader context shows that many Chinese holdings, including Alibaba, struggled amidst these macroeconomic headwinds. The outlook remains uncertain as these factors could persist, leading to a cautious stance on the investment.

Alibaba (BABA) represents our primary exposure to the Chinese market. Despite the persistent geopolitical noise and macroeconomic headwinds in the region, the business generates massive free cash flow and trades at a remarkably depressed valuation. This combination of strong cash generation and attractive valuation makes Alibaba a compelling investment opportunity in the current market environment.

Alibaba Group Holding is described as an 'Internet infrastructure and e-commerce services provider.' The letter mentions that it is one of the 'China-based digital commerce firms' in the portfolio, indicating its relevance in the context of the fund's investments. However, there is no explicit bullish or bearish argument made regarding its future performance or position within the portfolio.

Alibaba represents our primary exposure to the Chinese market. Despite the persistent geopolitical noise and macroeconomic headwinds in the region, the business generates massive free cash flow and trades at a remarkably depressed valuation. This combination of strong cash generation and attractive valuation makes Alibaba a compelling investment opportunity in the current market environment.

We sold out of Alibaba on concerns about its multipolar business structure and lack of strategic stability. Alibaba continues to suffer from organisational fatigue driven by constant restructuring; and while it admittedly represents the most credible Chinese parallel to the US 'Big 4' hyperscalers, we remain sceptical of the company’s true 'North Star'.