Alibaba reported its first-quarter results on 20 August, showing a mixed picture for investors. Revenue rose 9%, supported by faster growth in the company’s cloud computing and AI businesses, but net profit fell by nearly three-quarters as capital expenditure on AI infrastructure increased sharply.

Management said it expects those investments to reach break-even within the next three years. At the same time, free cash flow turned negative as spending on computing capacity continued to climb. To support further development of its full-stack AI ecosystem, Alibaba also completed a new share offering on the Hong Kong Stock Exchange this week, raising approximately $10.2 billion. Investors reacted cautiously to the combination of weaker earnings and equity dilution, underscoring how closely the market is watching the pace of AI spending against near-term profitability.

Technical Analysis of Alibaba

The four-hour chart shows a clear short-term uptrend that began in late July, with the share price advancing from around $92.00 to the $133.00 resistance area.

The stock is now attempting to break below its ascending trendline after buyers failed to maintain momentum following the test of recent highs. On 21 August, the price moved beneath the lower boundary of the current market profile at $121.50 on exceptionally high trading volume. If sellers extend the decline, the next significant support is near $113.00.

If the move proves to be a false breakout, attention will shift to a cluster of key resistance levels within the market profile. The Point of Control (POC) at $128.50 and the upper profile boundary at $129.50 sit close together, forming a potentially strong resistance zone. Above that area, the main resistance remains at $133.00.

The RSI + MAs indicator currently stands at 41, 48 and 51. RSI has slipped below the neutral zone, while both moving averages remain near the middle of their range, suggesting that bearish momentum has not yet been fully confirmed. That keeps the near-term setup tied to whether the stock can reclaim its recent trading range or remain under pressure after the post-earnings reaction.

Key Takeaways

Alibaba’s weaker profit performance and sizable share issuance have weighed on sentiment after its failed attempt to establish a position above $130.00. The stock’s next move is likely to depend on whether investors continue to focus on near-term earnings pressure or place greater value on the company’s long-term AI growth strategy.