POW!
Friday Pick of the Week!
Given the great interest from the interview on Thoughtful Money last week with Friend of Haymaker, Adam Taggart, it seemed only right to zero in on a foreign equity that we think looks quite attractive. For our new Haymakers who joined based on that appearance, welcome to the club - we’re thrilled you’re here.
“You pay a very high price in the stock market for a cheery consensus.” - Warren Buffett
“If you do good valuation work, the market will agree with you. You just never know when.” (Also from the Oracle of Omaha)
Friday Pick of the Week (POW) ↦ ALIBABA GROUP (BABA)
TLDR* summary:
The Mispricing: The market prices Alibaba (BABA) as a struggling e-commerce retailer; reality is dominant cloud provider (40% China market share) with Amazon Web Services (AWS)-like infrastructure moat, trading 2.3-2.7x sales vs Amazon's 3-4x and Microsoft's 10-12x
Cloud Acceleration: Alibaba Cloud revenue up 34% YoY (fastest in 4 quarters, accelerating from 26%), with AI products hitting triple-digit growth for 9 consecutive quarters and now representing 20%+ of external cloud sales
AI Infrastructure Bet: Deployed $16.9B in capex over past 4 quarters into AI data centers with NVIDIA GPUs and proprietary chips; Beijing explicitly approved H200 chip purchases, signaling government support
Fortress Balance Sheet: $41B net cash (Sept 2025) on $419B market cap gives massive flexibility for buybacks ($11.9B completed in fiscal 2025, 5.1% share reduction), AI investment, or acquisitions without dilution risk
