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 and payback return profiles and drill into key investor questions around funding, durability, assets and business mix. 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. On funding, we see Alibaba's funding gap narrowing further from end-CY27E and inflecting to positive by mid-CY28E in our base case, as Cloud EBITDA reaches eCommerce for the first time by the March 2028 quarter, turning Alibaba from a retailer funding a cloud business into one where cloud becomes the biggest operating cash flow driver. On durability, tight chip supply should keep GPUaaS pricing elevated near-to-medium term, and we lift FY27E/28E/29E AI Cloud and Compute growth to 53%/45%/39% from 53%/38%/33%, w