---
title: "Alibaba vs Tencent Holdings"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/40724939.md"
description: "Tencent is a money-printing machine, while Alibaba is a money-burning machine. They released their financial reports on the same day: Tencent generated 56.7 billion in free cash flow in a single quarter, while Alibaba had a net burn of 46.6 billion for the entire year. One invests in AI while making money; the other burns through all its profits and still can't cover the costs. Tencent's AI is "icing on the cake," while Alibaba's AI is "a last-ditch gamble." Tencent's AI dragged down profits by 8 percentage points; excluding that, growth was 17%—it can afford to invest and afford to lose. Alibaba's adjusted profit plummeted by 56%, with non-GAAP net profit in Q4 dropping to just 86 million—there's no turning back now..."
datetime: "2026-05-13T13:20:30.000Z"
locales:
  - [en](https://longbridge.com/en/topics/40724939.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/40724939.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/40724939.md)
author: "[zxxxxxx](https://longbridge.com/en/profiles/18701241.md)"
---

# Alibaba vs Tencent Holdings

**Tencent is a money-printing machine, Alibaba is a money-burning machine.**

Reporting earnings on the same day, Tencent generated 56.7 billion in free cash flow in a single quarter, while Alibaba burned a net 46.6 billion for the full year. One invests in AI while making profits, the other burns all its profits and still doesn't have enough to spend.

**Tencent's AI is "icing on the cake," Alibaba's AI is "a last-ditch gamble."**

Tencent's AI dragged down profits by 8 percentage points; excluding that, growth was 17%—it can afford to invest and afford to lose. Alibaba's adjusted profit plummeted 56%, with non-GAAP net profit in Q4 down to just 86 million—there's no turning back now.

**Tencent sells "addiction," Alibaba sells "goods."**

1.43 billion people can't live without WeChat, but 1 billion people can go to Pinduoduo to buy things. Social relationship chains are the only non-transferable digital asset; e-commerce GMV is not. Douyin can steal Alibaba's users, but it can't steal Tencent's relationship chains.

**Tencent's 17x PE is the market being lazy, Alibaba's 25x PE is the market being skeptical.**

Tencent's profits are real, sustainable, and distributable—buying a money-printing machine with 11%+ annualized growth and 4% buybacks at 16.9x is like picking up money with your eyes closed. Buying Alibaba at 25x is buying a "promise of profit recovery"—management says it will recover, but they didn't say when.

**Alibaba's problem is not valuation, it's trust.**

520.8 billion in cash, Cloud +34%, AI revenue triple-digit for 11 quarters—the data looks great. But what the market is asking is: when will you stop burning money? Leverage doubled, FCF turned negative, special dividend canceled—management is telling you with their actions: we're going to keep burning.

**Tencent's risk is "boredom," Alibaba's risk is "loss of control."**

Tencent's biggest risk is becoming a utility company with 15% growth after its games business peaks. Alibaba's biggest risk is 480 billion in AI investment going down the drain, turning into a low-margin, heavy-asset company. The worst-case for the former is still a value stock; the worst-case for the latter could be a value trap.

**Conclusion:**

If you want to sleep well, buy Tencent. If you want to gamble on a double, buy Alibaba.

⚠️ The above is for informational purposes only and does not constitute investment advice.

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## Comments (1)

- **bug1988 · 2026-05-13T16:21:40.000Z**: Both have 😭