New trades: Alibaba $BABA and Baidu $BIDU

Plus Micron, Alphabet Trade updates

September 29, 2025

New trades: Alibaba $BABA ( ▼ 2.03% ) and Baidu $BIDU ( ▼ 3.0% )

By @Charles IV 26.09.2025

The high capex and R&D spending required to be at the cutting edge of AI model development means challenging unit economics for AI firms such as OpenAI, necessitating access to capital markets. Chinese capital markets don't have the same level of depth required to fund similar AI capex as seen in the US. So, large tech companies such as Alibaba, Baidu, etc. with existing assets that are generating large amounts of free cash flow, can absorb the negative unit economics from its AI ventures, which means, unless there's strong consumer lock-in (i.e., high switching cost), deep-pocketed tech firms like BABA (sitting on ~$65B in cash) are more likely to be the ultimate winners in AI in China, as they are able to produce competitive AI applications/products while pricing their AI products at or near cost to grow market share.

BABA and BIDU’s Multiple Paths to Monetize AI:

Alibaba is building a full-stack AI empire via T-Head’s Pingtouge chips (on par with Nvidia’s H20), Cloud Services with $53B+ in AI and cloud infrastructure investments (26% Q1 FY2026 growth, AI-related revenue up 26% YoY as a significant portion), and Qwen models like Qwen3-Max (>1T parameters), rivalling OpenAI/Google on global benchmarks like Hugging Face. Its 1B+ userbase fuels data-driven personalization, while open-sourcing Qwen2.5 variants accelerates adoption. Global cloud expansions (Brazil, France, etc.) start in 2025, aligning with China’s self-sufficiency and tech diffusion goals.

Baidu, China’s search giant, mirrors Alibaba’s integrated approach with ERNIE models (e.g., ERNIE 4.5, 1.5B+ daily API calls), Kunlun AI chips as Nvidia alternatives, and a ~25% AI Cloud market share. Its 300M+ ERNIE Bot users drive data moats, while Apollo’s autonomous driving tech expands AI use cases. Baidu’s AI Cloud revenue up 27% YoY and projected 25%+ AI Cloud growth in 2025 make it a major player in China’s self-reliant AI push.

Some Risks to Consider:

Intense domestic competition from players like Tencent and Huawei, particularly in cloud and AI infrastructure, threatens market share as these rivals scale their own ecosystems, and potential involution among tech rivals may suppress AI profit margins longer than anticipated. Macroeconomic challenges, such as weak consumer spending, could further strain non-AI revenue streams—Baidu’s core advertising business, for instance, saw a 15% YoY decline in Q2 2025. Alibaba’s e-commerce segment also faces pressure from slowing retail growth and rising competition from platforms like PDD.

That said, we may be heading towards a future with two dominant technology systems, one led by western companies (e.g., OpenAI, Alphabet, etc.), and the other by China’s tech companies. China is aggressively pursuing AI self-reliance (e.g., Nvidia GPU ban), creating massive tailwinds for local leaders like Alibaba and Baidu. A meaningful portion of the world’s GDP could potentially operate on Chinese tech ecosystems one day, and BABA/BIDU are looking to position itself to be at the center of it all.

$BABA ( ▼ 2.03% )

$BIDU ( ▼ 3.0% )

Trade update: Up $14,000 on MU. Still riding high on the AI memory thesis!

By @Big Loitte 19.09.2025

Entered the trade around $100 back in January, now +70% to $170.

Micron’s HBM4 shipped in June, and the company raised Q4 revenue guidance to $11.2B+ (beat prior estimates), citing AI server ramp.

Nvidia reported Q2 earnings a few weeks ago, and guided Q3’s revenue to $54B (ex-China), versus the Wall St’s expected $55B (including China). Nvidia stock fell in after-hours trading on the headlines that NVDA’s Q3 guidance missed expectations, but after adjusting for China, I thought NVDA’s Q3 guidance was impressive!

What’s good for Nvidia, is also good for Micron. So, still bullish on the memory chip demand cycle.

$MU ( ▲ 0.28% )

Quick update re Alphabet trade from July. It's a winner so far, up about 30%

By @Bonds 15.09.2025

Q2 Earnings Beat: Alphabet crushed expectations with EPS of $2.31 (vs. $2.15 est.) and revenue topping forecasts, fuelled by 12% growth in Google Services, strong Search and YouTube performance, and accelerating Cloud momentum. They also bumped up 2025 capex to $85B for AI push. Stock popped post-report.

Antitrust Ruling Win: Big catalyst—U.S. judge ruled against breaking up Google, dodging a major bullet on the monopoly case. Shares surged over 9% that day, leading the S&P 500 and sparking the recent rally.

AI theme dominance and analyst upgrades (e.g., Evercore's $300 PT) keep the outlook strong despite broader market jitters around AI spending and fears of an "AI bubble”.

Valuation-wise, Alphabet's forward P/E still sits at a bargain 22.8x, the lowest in the Magnificent Seven versus Nvidia's 39.7x or Microsoft's 33x! And it's downright cheap next to AI darlings like Palantir (201x). This should provide some relative downside protection if AI volatility hits, as it won't face the same multiple compression risks as the frothier names.

Holding for now.

$GOOGL ( ▲ 0.31% )

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