September’s debate over Chinese and American AI spending puts Alibaba Group Holding Limited (NYSE:BABA) and Amazon.com, Inc. (NASDAQ:AMZN) on opposite sides of the same investment question. Both report strong demand for computing services. Shareholders still need that demand to justify the infrastructure bill.
September 7 coverage of Jefferies’ analysis highlighted differences in spending intensity. The companies’ own results suggest a more useful test than choosing a winner from headline capital expenditures: distinguish operating progress from cash committed ahead of future growth.
Growth is arriving alongside the spending
Alibaba’s August 20 report showed June-quarter AI Cloud and Compute Services revenue increasing 45% to RMB48.44 billion. Segment adjusted EBITA reached RMB5.63 billion. The reporting group now combines its former Cloud Intelligence Group with T-Head, so investors should use the company’s recast comparisons.
That operating improvement supports the case that computing demand can generate returns. It does not mean the spending cycle has already paid for itself. Group capital expenditures reached RMB67.68 billion, while free cash flow, a non-GAAP liquidity measure, was negative RMB44.67 billion for the quarter.
The opportunity is to keep expanding customer demand and utilization as new infrastructure becomes available. The risk is that cash outlays remain elevated while weaker returns elsewhere in the group reduce the room for error. Cloud growth alone cannot settle the value of the entire business.
Amazon’s July 30 results showed AWS revenue increasing 37% to $42.2 billion and segment operating income reaching $16.6 billion. That is substantial operating performance, although its accounting measure is not directly interchangeable with Alibaba’s adjusted EBITA.
Amazon also reported negative free cash flow of $7.6 billion for the trailing twelve months. That period differs from Alibaba’s quarterly figure and should not be compared as though both describe three months. Amazon attributed the decline primarily to increased property and equipment purchases supporting AI investment.
Cash returns will decide the comparison
Both companies can benefit if capacity supports durable customer spending. Both face the possibility that installation costs, competition and utilization make the return less attractive than the growth rate suggests.
Insider Monkey’s database counted 97 Alibaba holders in Q2 2026 versus 102 in Q1, and 369 Amazon holders versus 353. David Tepper’s Appaloosa held Alibaba, while Dan Loeb’s Third Point held Amazon. Those historical snapshots do not establish September buying.
August 14 short interest was 2.00% of Alibaba’s float and 0.97% of Amazon’s. For Alibaba Group Holding Limited and Amazon.com, Inc., the meaningful next evidence is improving cash generation alongside cloud growth. Spending less is not automatically better; earning durable returns on the spending is what matters.
READ NEXT: The Trillion-Dollar AI Capex Gap: Why Too Much Hardware Could Be Nvidia’s Trap and Microsoft’s Opportunity and Redditors Are Skeptical of SpaceX’s Orbital Data Centers. Are They Right?