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Since the open, Alibaba rallied sharply. Beyond a broad rebound in HK stocks, the main catalyst was Alibaba's freshly released Q2 results preview, which included several positives; details below:

1) E-com remains the laggard, with CMR expected to decline by a high-single-digit % YoY; excluding changes in revenue recognition scope, it should be flat to slightly up YoY. Profit is expected to dip slightly YoY.

However, this has been well anticipated, and the sustained share-price weakness has already reflected, if not over-discounted, this setup.

2) Cloud was the standout, with next-quarter revenue growth expected to accelerate to Approx. 45%, ahead of the market's just-over-40% pace. While the Qwen model is not yet best-in-class, cloud growth remains strong.

Benefiting from a higher MaaS mix and in-house chips, cloud OPM is also expected to improve notably to above 10%, broadly mirroring global cloud peers.

3) A secondary positive: next-quarter food-delivery losses are expected to narrow materially to around RMB 10bn. This is consistent with Meituan's Q2 UE trending sharply better, potentially turning positive.

Overall, e-com is clearly weakening, while cloud and AI performance continues to improve, even if the foundation model is not an obvious leader. Delivery-war participants are collectively cutting losses. These trends are broadly in line with Dolphin Research and market expectations and do not signal a thesis change.

The key point: over the past month-plus, Alibaba's share price fell from around HK$130 to below HK$90, an overshoot in a short window that merits some valuation repair. Looking ahead, medium-to-long-term upside still depends on a modest domestic cyclical turn in H2 and on whether Alibaba's foundation model and chip capabilities can regain industry leadership.

$Alibaba(BABA.US) $BABA-W(09988.HK)