Investor Michael Burry, best known for predicting the 2008 financial crisis, has reopened a position in Alibaba Group Holding after previously exiting the stock entirely in 2025. The move is drawing renewed attention to Alibaba as investors debate whether the Chinese technology giant represents one of the market’s most undervalued mega-cap opportunities or a prolonged value trap shaped by geopolitical and regulatory risks.

Michael Burry Returns to Alibaba

In comments posted to Substack earlier this year, Burry confirmed that he initiated a new position in Alibaba Group Holding Limited while also adding to his existing investment in JD.com.

According to Burry, Alibaba represented slightly more than 6% of the newly established allocation, while JD.com accounted for a somewhat larger portion of the investment.

Burry described the recent weakness in Chinese technology shares as presenting “an attractive entry point,” signaling that he believes current market pricing significantly underestimates the long-term earnings power and asset value of Alibaba.

The new purchase is notable because Burry had previously owned approximately 250,000 shares of Alibaba during the second quarter of 2025 through his hedge fund, Scion Asset Management, before completely exiting the position during the third quarter that same year.

His return suggests renewed conviction that the market may now be overly pessimistic toward China’s technology sector and Alibaba specifically.

Alibaba Continues Trading at Depressed Valuation Levels

Alibaba’s valuation has remained heavily compressed for several years following a combination of Chinese regulatory crackdowns, slowing economic growth, geopolitical tensions with the United States, and declining international investor exposure to Chinese equities.

Once viewed as one of the world’s dominant growth technology companies, Alibaba now trades at valuation multiples far below many U.S.-based technology peers despite continuing to generate substantial free cash flow and maintain large-scale operations across e-commerce, logistics, cloud computing, and digital payments.

Value investors such as Burry often target situations where market sentiment becomes extremely negative while the underlying business fundamentals remain significantly stronger than current share prices imply.

Burry’s investment philosophy historically focuses on identifying asymmetric opportunities where downside risk appears limited relative to potential long-term upside.

In Alibaba’s case, supporters argue that years of investor pessimism have created one of the deepest valuation discounts among global mega-cap technology companies.

China Risks Continue Weighing on Investor Sentiment

Despite the valuation appeal, Alibaba continues facing major risks that have kept many institutional investors cautious toward Chinese equities.

Regulatory uncertainty remains a key concern following years of government intervention into China’s technology sector. International investors also remain sensitive to tensions between Washington and Beijing involving trade, technology restrictions, and capital market access.

Additionally, China’s broader economic slowdown and weak consumer sentiment have pressured growth expectations across the country’s internet and retail sectors.

These factors have contributed to substantial foreign capital outflows from Chinese markets over the past several years, limiting valuation recovery despite improving profitability at several large technology firms.

For many investors, Alibaba’s investment case now depends heavily on whether China’s regulatory environment stabilizes and whether broader confidence in Chinese markets eventually improves.

AI and Cloud Computing Add Long-Term Growth Potential

Beyond its core e-commerce business, Alibaba also maintains significant exposure to artificial intelligence infrastructure and cloud computing through Alibaba Cloud.

China’s growing investment in domestic AI capabilities has increased attention on whether Alibaba’s cloud division could eventually become a more important long-term growth driver.

The company has continued investing in AI models, enterprise cloud services, logistics automation, and digital infrastructure despite the broader market downturn.

Some investors believe Alibaba’s cloud and AI-related assets remain substantially undervalued relative to comparable global technology companies.

However, competition within China’s cloud and AI sectors continues intensifying as firms such as Tencent, Baidu, Huawei, and ByteDance aggressively expand their own capabilities.

Investors Remain Divided on Alibaba’s Future

Alibaba now represents one of the clearest examples of a stock where valuation, sentiment, and geopolitical risk are deeply intertwined.

Optimistic investors view the company as a deeply discounted global technology leader with powerful cash flow generation, dominant market positioning, and long-term AI growth opportunities.

More cautious investors argue that persistent geopolitical uncertainty, unpredictable regulation, and slower Chinese economic growth could continue suppressing valuation multiples for years.

Michael Burry’s renewed investment has once again placed Alibaba at the center of the broader debate surrounding value investing opportunities inside China’s technology sector.

Looking ahead, investor focus will likely remain centered on China’s regulatory policies, consumer spending recovery, AI monetization, and the future relationship between Chinese technology companies and global capital markets.