Alibaba’s Hong Kong-listed shares rose 15%

Alibaba’s shares jumped more than 15% on Monday, marking their biggest single-day rally since early 2023, after the company reported explosive growth in artificial intelligence revenue.

The e-commerce giant said sales from AI-related products surged by triple digits, while its cloud division grew 26% to 33.4 billion yuan ($4.7 billion), far surpassing analyst expectations. The cloud unit, which powers Alibaba’s AI services, has become a key driver of the company’s expansion.

The results highlight the e-commerce company’s transformation from a retail-heavy business into a diversified technology player. Analysts noted that AI is no longer a side project but a central growth engine for the company. Charu Chanana, chief investment strategist at Saxo Markets, said Alibaba was being extremely strategic about its long-term relevance in the tech stack, adding that the surge in AI and cloud proved the company was no longer just an e-commerce powerhouse.

Alibaba surges as AI and cloud push fuel investor confidence

Alibaba’s Hong Kong-listed shares logged their biggest gain since February, adding billions to the company’s market value in just one trading day. The sharp reversal regained confidence in the company’s long-term trajectory.

The surge rippled across China’s tech sector. Baidu rose nearly 6%, while Tencent climbed more than 3%, as investors wagered that Alibaba’s strong results signal broader momentum for the country’s artificial intelligence industry. Analysts said the rally reflects how closely AI optimism has become tied to stock performance in Asia’s technology market.

The contrast with rivals was sharp. JD.com and Meituan remain in bruising price wars in food delivery and online shopping. Both companies have seen profits pinched to the point where Meituan even warned of big losses earlier this quarter. That pressure has resulted in a new wave of investor caution around traditional internet commerce.

Meanwhile, Alibaba is doubling down on artificial intelligence and cloud computing fields, which the company has said are more lucrative and scalable than its retail. Boosting its technology prowess will not only allow the company to diversify its revenue sources, but it could also shelter it from the intense price wars that characterize e-commerce.

A key aspect of this approach is investment in AI hardware. The company is developing its AI chip to reduce dependence on foreign semiconductors. Analysts see this as critical because US restrictions are increasingly cutting off access to powerful chips necessary to train large AI models. Designing its own hardware could give Alibaba an advantage in constructing faster, cheaper, and more secure AI systems adapted to Chinese markets.

Market analysts say this mix, a powerful cloud business, surging AI offerings, and calculated self-reliance, drives investor support for the e-commerce company’s turn. It makes the company a retail giant and one of the leading players in China’s race to become a dominant force in next-generation technology.

Alibaba doubles down on AI to drive growth and outpace rivals

Alibaba’s leaders have emphasized that artificial intelligence is a core part of the company’s strategy. CEO Eddie Wu said earlier this year that Alibaba is now focused on building towards artificial general intelligence (AGI) as its “main goal.

Recent updates included an open-source video generation model and upgrades to large language models supporting e-commerce, logistics, and cloud services. The capabilities are being extended not only to China but also to international platforms like Lazada and AliExpress.

Although Alibaba continues to feel pressure in traditional online commerce from JD.com and Meituan, analysts believe AI will protect Alibaba somewhat from price wars in parts of the industry. Analysts at Morgan Stanley called Alibaba “China’s best AI enabler thesis” as they noted how well the company could scale AI services across businesses.

Still, Alibaba Group Chairman Joe Tsai has expressed concerns about a potential bubble in AI data center construction. At the HSBC Global Investment Summit in Hong Kong earlier this year, he noted that the rapid global expansion of server farms, spanning from the US to Asia, could outpace actual demand.

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