Alibaba: Investing in the Chinese Amazon

In March, I invested in Alibaba, the Chinese cCommerce company that is often known as the Chinese Amazon. Its business model reflects Amazon to quite a degree, with four business segments: eCommerce, Cloud Computing, Entertainment and Innovation Initiatives.

The thesis is quite simple. Alibaba will continue to grow its eCommerce business, generating stable and significant profits for investors, while its cloud computing business will scale and eventually replace eCommerce as the dominant business.

Today, China's cloud computing business is in its adolescence, with a market size that's ~10% of the United States and growing at ~60% annually.

Alibaba is the leading cloud provider in China, with a market share of over 40%.

This draws parallels to Amazon's AWS division, which has accounted for the majority of Amazon's operating profits for the last few years. Most recently, it made up 63% of the company's operating profits and earned $13.5B on $45.3B in revenue.

My conviction in Alibaba is that its cloud computing segment will scale over the next few years, while its ecommerce business will continue to return great profits.

TODO: Figure out how much Alibaba is worth in 2-5 years.