Alibaba surges 50% in September, tops Hang Seng tech index

Alibaba Group Holding saw its shares climb Monday after two major investment firms raised their price targets, pointing to better growth expectations in the company’s cloud computing and artificial intelligence divisions.

Morningstar increased its fair value estimate for Alibaba’s American Depositary Receipts by 49% to $267. The firm also set its Hong Kong-listed shares at HK$260. Separately, Morgan Stanley lifted its ADR price target by 21% to $200.

The Hong Kong-listed stock rose as much as 4.1% to over HK$173 during Monday’s session. That brought the company’s gain this month to nearly 50%, putting it at the top of the Hang Seng Tech Index.

Chelsey Tam, a senior equity analyst at Morningstar, wrote in a note that the shares look undervalued. She said several things are helping cloud revenue grow, including more money going into overseas data centers, strong competitive results, wide use of the company’s open-source models, and better performance from chips it developed in-house.

As reported by Bloomberg, Morgan Stanley analysts said they became more positive about Alicloud after a conference in Hangzhou. At that event, Alibaba announced plans to spend more on AI and revealed a new partnership with Nvidia.

Cloud Growth Forecasts Raised to 40%

Gary Yu and his team at Morgan Stanley raised their cloud growth forecasts to 32% for fiscal 2026 and 40% for fiscal 2027. The analysts said the higher estimates reflect increased capital spending, model improvements, strategic partnerships, and faster expansion into international markets.

Alibaba’s Hong Kong-listed stock is on pace for its best month since the company went public there in 2019. Investors are backing the internet company’s AI investments as a way to drive growth. In the most recent quarter, the firm reported triple-digit growth in AI-related products. Its cloud division also delivered sales growth that exceeded expectations.

As optimism builds, Cathie Wood’s Ark Investment Management reopened positions in Alibaba’s ADRs this month. It was the first time the firm bought the stock in four years buying $16 billion worth of Alibaba stock. Half of that amount went into the Ark Fintech Innovation ETF, while the rest went into the Ark Next Generation Internet ETF. It marked her first major purchase of the company since 2021.

Strategic Nvidia partnership to bypass U.S. Chip restrictions

As reported by Cryptopolitan earlier Alibaba’s global AI spending could reach $4 trillion over the next five years. Eddie said Alibaba needs to keep up with that pace or risk getting left behind.

Alibaba is now pursuing the same opportunity as Amazon, Microsoft, Alphabet, and Meta. Those companies are expected to spend $364 billion on AI next year, up from an earlier estimate of $325 billion.

The company also signed an agreement with Nvidia to use its training tools for robotics and self-driving vehicles. Financial terms weren’t disclosed, but the partnership carries weight. U.S. restrictions have made it harder for Chinese companies to purchase Nvidia’s chips, so Alibaba is finding ways around those limits.

Other Chinese firms are also developing domestic chips to replace American technology, including the processors used to train and operate large AI systems.

Eddie said the company wants to become a complete AI provider, which includes making its own chips. The cloud division already serves clients in the U.S. and Australia and is now expanding its reach.

New data centers are opening in Brazil, France, and the Netherlands. These facilities will support the next phase of Alibaba’s AI infrastructure. The company’s stock has climbed 110% in 2025.

Cloud revenue grew 26% year-over-year in the second quarter. Eddie identified AI, cloud, and e-commerce as the company’s three main growth drivers, with AI now taking the leading role.

Other companies are seeing similar effects from AI investments. Oracle is putting $35 billion into AI infrastructure for 2026, with that number expected to reach $65 billion by 2029. Thanks to new partnerships with OpenAI, Meta, and SoftBank, Oracle’s stock has surged, adding $390 billion in value this year.