Microsoft vs. Alibaba: Which Cloud Titan Is the Smarter Buy Right Now?

Zacks compares Microsoft (MSFT) and Alibaba (BABA) as cloud-AI leaders and concludes Microsoft is the smarter buy. Microsoft’s AI-driven cloud scaled past $50 billion in quarterly revenues, Azure grew ~39%, operating margin expanded to 47%, and commercial RPO reached $625 billion, supporting stronger earnings visibility (Zacks FY26 EPS consensus $17.10). Alibaba’s total revenue rose just 2% to RMB 284.8 billion while GAAP net income plunged 66% amid heavy AI and quick-commerce spending; cloud AI growth is strong but profitability and cash flow are under pressure. Valuation and price performance favor Microsoft (smaller recent decline vs. BABA’s larger tumble), and Zacks recommends buying MSFT and avoiding BABA given Microsoft’s margin expansion, product momentum and clearer monetization path. Near-term risks include capex and GPU supply constraints for Microsoft and regulatory/competitive headwinds for Alibaba.