Alibaba Group (BABA) Deeper-dive beyond ROIC to assess funding gap, durability, and drivers for a re-rating

As Alibaba's AI narrative continues to evolve, we look beyond ROIC/payback return profiles and drill into key investor questions around funding, durability, assets, and business mix. We address: 1) Alibaba's capex trajectory, on which views diverge given near-term chip supply limitations, rise in rental prices and potential funding needs. We maintain our Rmb712bn (US$105bn) aggregate capex forecast over FY27E-29E, and introduce a bottom-up capex-to-AI Cloud revenue conversion model, mapping an upside case for Alibaba's IT power consumption to reach 20GW by end-CY2032, with GPU pricing and rented-in compute mix as key swing factors; 2) How the build-out will be funded, where we see Alibaba's funding gap narrowing further from end-CY27E and inflecting to positive by mid-CY28E under our base case, as we estimate Cloud EBITDA will reach eCommerce for the first time by the March 2028 quarter. This would turn Alibaba from a retailer business funding a cloud business into one in which cloud b