With an additional investment of 380 billion, how much more resources does Alibaba have?

At the 2025 Yunqi Conference on September 24th, Wu Yongming, the CEO of Alibaba Group, stated that Alibaba is currently actively promoting the construction of a 380 billion yuan AI infrastructure and plans to make even greater additional investments. Compared with 2022, the first year of GenAI, the energy consumption scale of Alibaba Cloud's global data centers will increase tenfold by 2032.

This is undoubtedly a piece of news that far exceeds expectations, indicating that after overseas cloud providers such as Oracle announced increased AI capital expenditures, domestic cloud service giants have also begun to quickly follow suit.

So, how much capital expenditure can Alibaba's current financial strength and future cash flow support? How much more can it increase its AI infrastructure construction on the basis of the 380 billion yuan?

Static perspective: How much money can Alibaba mobilize?

Analyzing Alibaba's potential static available funds can be divided into three levels (without considering external financing arrangements, only for rough estimation):

The first level is short - term available funds, which are highly liquid. The sum of short - term assets such as cash on the books, short - term investments, short - term equity securities and other investments, and accounts receivable is used to measure the maximum amount of funds the company can mobilize in the short term.

The second level is medium - and long - term potential funds, which require the liquidation of financial assets. On the basis of the first level, considering the liquidation of the company's long - term investments (such as wealth management, bonds, equity investments, etc.), we can measure the maximum potential amount of funds the company can mobilize in the long term.

The third level is the stable funds after debt repayment. On the basis of the second level, considering financial stability, it is assumed that this is the maximum amount of funds the company can still mobilize after repaying all kinds of rigid debts. Rigid debts mainly include: short - term liabilities (accounts payable, short - term loans, short - term bonds, taxes payable) and long - term liabilities (long - term loans, long - term bonds, long - term notes).

The funds corresponding to the first level are approximately 492.4 billion yuan: As of the first half of 2025, Alibaba had 183.1 billion yuan in cash on the books, 191.7 billion yuan in short - term investments, 41.6 billion yuan in short - term equity securities and other investments, and approximately 76 billion yuan in various accounts receivable (using Q1 2025 data as a substitute). The company's short - term available funds totaled 492.4 billion yuan.

Chart: Calculation of Alibaba's short - term available funds. Source: Company announcements, compiled by 36Kr.

The funds corresponding to the second level are approximately 971.4 billion yuan: As of the first half of 2025, Alibaba had 365.3 billion yuan in long - term equity securities and other investments, and approximately 113.7 billion yuan in investments accounted for by the equity method (excluding Ant Group). The total long - term investments were 479 billion yuan. The maximum amount of funds the company can mobilize in the long term is 971.4 billion yuan, nearly one trillion yuan.

Chart: Calculation of Alibaba's medium - and long - term potential funds. Source: Company announcements, compiled by 36Kr.

The funds corresponding to the third level are approximately 524.7 billion yuan: As of the first half of 2025, Alibaba's short - term liabilities (accounts payable and others, short - term loans, short - term bonds, taxes payable) totaled 239.2 billion yuan, and long - term liabilities (long - term loans, long - term bonds, long - term notes) totaled 207.5 billion yuan, with a total of 446.7 billion yuan. Therefore, after considering debt repayment, the maximum amount of funds Alibaba can mobilize is approximately 524.7 billion yuan.

Chart: Calculation of Alibaba's funds after considering debt repayment. Source: Company announcements, compiled by 36Kr.

Therefore, from a conservative perspective, the maximum amount of funds Alibaba can mobilize for AI infrastructure is the amount after repaying all long - term and short - term debts, which is the funds at the third level, amounting to 524.7 billion yuan.

From the perspective of matching the maturity of assets and liabilities, if Alibaba invests funds in long - term return projects such as AI infrastructure, its debt side should at least match long - term debts. If Alibaba further increases its risk appetite and uses the funds raised through long - term debts for AI infrastructure, the amount of funds it can mobilize is approximately 732.2 billion yuan.

Overall, under the static constraints of the balance sheet, the amount of funds Alibaba can mobilize is approximately between 524.7 billion and 732.2 billion yuan, which is 1.4 - 1.9 times its original planned capital expenditure of 380 billion yuan.

In the future, how much more capital can it generate?

From a dynamic perspective, the future operation of Alibaba's main business will also bring continuous cash flow to the company. So, how much cash flow can its operating activities actually generate?

There are two main indicators to measure the cash - generating ability of the main business. One is the actual cash received in the company's current operating activities, which is the net cash flow from operating activities. The other is Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization), which means that without considering financial income and equity incentive expenses, it is the cash that the company should have received rather than actually received in its current operating activities.

Looking at a longer period, from FY21 to FY25 (i.e., from the fiscal year 2021 to 2025), Alibaba's total Adjusted EBITDA and net cash flow from operating activities were basically similar, both exceeding 920 billion yuan. However, since Adjusted EBITDA excludes the impact of short - term changes in accounts receivable, accounts payable, and inventory on cash flow, for Alibaba, Adjusted EBITDA is a more stable observation indicator.

Chart: Comparison of Alibaba's Adjusted EBITDA and net cash flow from operating activities in each fiscal year. Source: Company announcements, compiled by 36Kr.

Alibaba's capital expenditure target is 380 billion yuan over three years, and it plans to make even greater additional investments. So, how much capital can Alibaba's main business generate in the next three years?

Here, a simple calculation method is used. The average Adjusted EBITDA from FY21 to FY25 is used as the average annual net cash flow from operating activities for Alibaba in the next three years, i.e., from FY26 to FY28. This figure is 185 billion yuan, with a total of 555 billion yuan over three years. Even if we exclude the previously announced 50 billion yuan flash - sale subsidy, Alibaba can generate a cash flow of 500 billion yuan in the next three fiscal years.

This 500 billion yuan of cash flow, plus the potential available funds of 524.7 - 732.2 billion yuan calculated under the static balance sheet mentioned above, even without new debt financing, the potential funds that Alibaba can use for AI infrastructure in the next three years can exceed one trillion yuan at most, which is 2.7 - 3.2 times its original planned capital expenditure of 380 billion yuan.

How much can the capital expenditure be increased?

From the perspective of fund expenditure arrangements, the cash flow accumulated from Alibaba's operating activities is mainly used in two directions: one is capital expenditure for AI infrastructure, and the other is expenditures such as share repurchases and cash dividends.

In fiscal years 2024 and 2025, Alibaba's share repurchase amount was in the range of 80 - 90 billion yuan. However, starting from Q3 of FY25 (i.e., the fourth quarter of 2024), Alibaba's share repurchase amount has dropped significantly, which is naturally to free up funds for capital expenditure.

Based on current data, Alibaba's annualized share repurchase scale is approximately 20 billion yuan. In addition, from the perspective of cash dividends, according to Wind data, Alibaba's cash dividend scale in FY23, FY24, and FY25 was 18.1 billion, 28.6 billion, and 34.2 billion yuan respectively. Assuming that Alibaba does not conduct share repurchases, dividends, etc. in the future and instead invests the funds in AI capital expenditure, it can increase its capital expenditure scale by approximately 50 billion yuan per year, or 150 billion yuan over three years.

Chart: Calculation of Alibaba's quarterly share repurchase amount. Source: Company announcements, compiled by 36Kr.

Overall, in the extreme case, the amount of funds Alibaba can mobilize in the next three years is in the trillions, far higher than its original planned capital expenditure of 380 billion yuan. On the other hand, if Alibaba redirects all future share repurchases and dividends to AI capital expenditure, it can also increase its investment scale by approximately 50 billion yuan per year.

Therefore, the huge amount of funds is the confidence for Alibaba to propose to increase investment in AI infrastructure, as long as AI can form a definite trend.

Compared with overseas Internet giants, according to Wind data, in the latest fiscal year of companies such as Microsoft, Amazon, and Google, the ratio of capital expenditure to EBITDA ranges from a maximum of 89% to a minimum of 39%, with an average of 55%. Considering that EBITDA does not exclude financial income and equity incentive expenses, the average ratio of capital expenditure to Adjusted EBITDA of the above - mentioned companies is generally slightly lower than the above - calculated level.

If we divide Alibaba's planned capital expenditure of 380 billion yuan over the next three years by its estimated total Adjusted EBITDA of 500 billion yuan over the next three years, this ratio is approximately 76%, second only to Oracle's expenditure ratio. Assuming that Alibaba raises the ratio of capital expenditure to Adjusted EBITDA to 100%, its capital expenditure scale over the next three years can increase by approximately 120 billion yuan compared with the original planned 380 billion yuan, which is approximately the same as the increase in capital expenditure after stopping dividends and share repurchases.

Chart: Calculation of the capital expenditure (from the cash flow statement perspective) and EBITDA of overseas giants in the latest fiscal year. Source: Wind, compiled by 36Kr.

Overall, in the next three - year period, if Alibaba uses all the cash flow accumulated from operating activities for AI capital expenditure without using its current book funds and financial assets, Alibaba's AI expenditure scale can be increased from 380 billion yuan to over 500 billion yuan. If the progress of future AI applications is sufficient for cloud providers to "go all in", Alibaba still has over 500 billion yuan in reserve funds on its books.