Michael Burry has moved out of Alibaba and into JD.com just as Alibaba asks the market for HK$80 billion to fund its AI buildout. If you own the stock, the issue is plain: growth may come later, but dilution is happening now.
Michael Burry made his name calling the 2008 housing crash. Now he's picked a very specific fight with Alibaba: in a Substack post on August 23, he said he'd moved his entire Alibaba position into JD.com, the Chinese e-commerce rival, and no longer planned to switch most of it back after a month or two.
Not anymore.
Burry wrote that Alibaba would have to fall by half before he became interested again. He also praised the company's push into low-cost large language models, saying Alibaba is making serious inroads there. That is what makes the call sharper. He isn't dismissing the technology story. He's saying the stock price and the financing math don't work for him.
Alibaba Is Asking Shareholders To Pay For AI #
Alibaba announced on August 23 that it had priced a HK$80 billion placement of 710 million new ordinary shares in Hong Kong at HK$112.70 each. The company said the offering is expected to close on August 26, subject to customary conditions, and that 100% of the net proceeds will go into its full-stack AI capabilities, including AI infrastructure.
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That is a serious capital call. According to Reuters, Alibaba said the deal would be the largest-ever primary follow-on offering by a Hong Kong-listed company and the world's third-largest primary follow-on share sale this year, behind Alphabet and Intel. Reuters also reported that the placement drew strong demand, including from sovereign wealth funds, and that the company increased the size after the deal was oversubscribed.
Burry's objection is not complicated. "I cannot bless share issuances," he wrote on Substack, adding that Alibaba's return on invested capital would continue to fall. This is the part investors shouldn't glide past. A company can have a credible AI plan and still hand existing shareholders a worse bargain if it keeps issuing stock to pay for it.
The cost is real.
Alibaba's own numbers already show the pressure. The Associated Press reported that Alibaba's net profit for the April-to-June quarter fell 75% from a year earlier to 10.5 billion yuan, or about $1.6 billion, while capital expenditures rose 75% to 67.7 billion yuan, roughly $10 billion. Revenue still rose 9% to nearly 269 billion yuan, and AI cloud and compute services revenue grew 45% to 48.4 billion yuan, so this isn't a collapse story. It is a spending story.
Why JD.com Gets The Money Instead #
Burry's move into JD.com says something useful because it narrows the argument. He isn't walking away from Chinese technology shares altogether. He is walking away from Alibaba at this price, with this share sale, and with this AI spending bill attached.
That distinction matters if you are trying to read the trade rather than just the headline. Here's why. JD.com sits in the same broad Chinese consumer and logistics fight, but it has not made the same HK$80 billion AI funding ask this week. Burry also wrote that he still believes China's delivery wars could end with less cutthroat competition and higher margins for JD.com and Meituan. That is the bet. He wants exposure to a possible margin reset, not to a fresh round of Alibaba dilution.
Fortune, citing Burry's disclosure, noted that the move reverses a position he had held earlier in the year, when Alibaba and JD.com were both meaningful pieces of his China tech exposure. He's been early before, and wrong before too. You don't need to treat his Substack post as instruction - you do need to treat it as a clear test of Alibaba's AI trade.
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Here's the thing: investors are still lining up for the placement. The market can disagree with Burry and be rational about it. Alibaba has the cloud business, the Qwen model family, the e-commerce base and the balance sheet scale to make a real attempt at AI infrastructure. If that spending turns into faster cloud growth and better margins, today's dilution may look tolerable later.
But later is doing a lot of work in that sentence. Existing holders are taking the dilution now. The payoff depends on chips, data centers, model development and cloud demand turning into returns that show up in the financials, not just in investor appetite for anything tied to AI.
For the moment, Alibaba has the buyers and Burry has the objection. The cleanest way to frame it is also the simplest: Alibaba is selling more shares to fund an AI race, and Burry would rather own JD.com than pay today's price for that race. Also read: Samsung Approves Record $80 Billion Shareholder Return on AI Memory Boom | BitGo Wins South Korea's First Direct Crypto License For A Foreign Firm | The EU Just Barred Transactions With Justin Sun's HTX Exchange