Alibaba (BABA) stock is printing its strongest single-day performance in about ten months on July 8th following a sneak peek into its fiscal Q1 results.
Investors are loading up on the Chinese tech behemoth after the leaked earnings preview signalled a return to top-line growth in its core e-commerce segment.
Additionally, BABA is proving a key beneficiary of the broader capital rotation currently underway – with institutional investors trimming exposure to overextended Western semiconductor stocks in favour of the discounted Chinese artificial intelligence (AI) names.
A popular name that isn’t participating in the said rotation, however, is ARK Invest’s founder and chief executive officer Cathie Wood, who has actually unloaded Alibaba shares recently to invest in another overvalued US stock.
Wood sells Alibaba stock to load up on SpaceX
While retail and institutional desks are bidding up BABA shares on Wednesday, Cathie Wood has spent recent weeks moving completely in the opposite direction.
The famed investor has unloaded her stake in the Chinese giant almost entirely, after selling about $54 million worth of it in a single day late in June.
Instead of riding the AI hype and the subsequent near-term wave of recovery in China’s tech names, the ARK Invest founder is diverting the freshly unlocked capital into alternative frontiers.
Her primary target has been SpaceX (SPCX), of which she has accumulated another 44,000 shares this week.
What might have made Wood sell BABA shares
Cathie Wood might have pulled out of Alibaba shares because of “deep-seated concerns” about the true long-term monetization timeline for Chinese large language models (LLMs).
While data shows Alibaba Cloud maintaining a dominant 40.1% market share in China’s full-stack artificial intelligence cloud infrastructure with its proprietary Qwen model, converting that sheer volume into high-margin enterprise profitability remains a significant hurdle.
Moreover, China’s strict AI regulatory environment imposes structural compliance headwinds that Western firms do not face, further hurting the potential for exponential growth.
Combined with margin erosion tied to BABA’s highly capital-intensive instant-commerce delivery, the risk-to-reward ratio perhaps soured for ARK Invest.
SpaceX: a better AI play than Alibaba?
Ultimately, Cathie Wood’s refusal to buy the Alibaba hype highlights a sharp philosophical divide on Wall Street regarding the next phase of AI deployment.
Shorter-term traders view BABA stock as fundamentally mispriced at about 15x forward earnings, especially since it controls the foundational infrastructure of the Chinese digital economy.
But Ark Invest is executing a structural arbitrage, fleeing China’s consumer uncertainties to wager on what Cantor Fitzgerald recently described as “planetary infrastructure”.
Wood’s bold reallocation implies that true exponential AI gains will not be captured by domestic e-commerce applications, but by frontier platforms like SpaceX’s Starlink, which aims to pioneer orbital space data centers to rent out massive, unconstrained computing power by 2030.
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