This rally has made Alibaba the top performer among China’s Big Tech firms, outpacing Tencent, Baidu, and JD.com, and surpassing the Hang Seng Tech Index’s 25% gain during the same period.
The surge marks a sharp reversal for Alibaba, which had struggled in recent years due to Beijing’s regulatory crackdown and weak post-pandemic consumer spending. Investor optimism is being driven by Alibaba’s renewed focus on AI, particularly its investments in cloud computing and AI-driven services.
The company’s stock got an extra boost following reports that Apple is working with Alibaba to roll out AI features in China.
A major catalyst for the renewed interest in China’s AI sector was the emergence of DeepSeek, a Chinese AI startup whose advancements rattled global markets.
Analysts see Alibaba as one of the few Chinese tech firms with established earnings potential in the AI space. Since taking the helm in 2023, Chairman Joe Tsai and CEO Eddie Wu have focused on streamlining Alibaba’s core e-commerce business while aggressively expanding into AI.
The company has invested in promising AI startups such as Moonshot and Zhipu and has prioritized cloud computing, slashing prices to regain customers lost during the regulatory turbulence.
Alibaba’s AI push is already showing results. In January, it released benchmark scores demonstrating that its Qwen 2.5 Max AI model outperformed Meta’s Llama and DeepSeek’s V3 in various tests.
The company is now considered a major AI player alongside Tencent, ByteDance, and several emerging startups. However, monetizing AI services remains a challenge for Alibaba.
Domestic businesses and consumers have been slow to adopt AI tools, and China’s cloud computing growth still lags behind US rivals like Amazon and Microsoft.
JPMorgan analysts noted that hedge funds and institutional investors view AI as a potential turning point for Alibaba but remain cautious about the company’s ability to generate revenue from its AI innovations.
Alibaba’s cloud business, a critical part of its AI strategy, is projected to have grown by 9.7% in the last quarter—better than Baidu’s 7.7% but far behind Amazon’s 19% and Microsoft’s 31%. The company’s upcoming earnings report will be closely watched for updates on its AI initiatives and cloud expansion.
Options traders are also betting on Alibaba’s continued rise, with bullish contract volumes surging to a four-month high. Despite the recent rally, some investors still see Alibaba as undervalued. The company’s shares trade at 12.2 times forward earnings, below its five-year average of 14.6 times.
Some analysts believe Alibaba’s international expansion could further drive growth, reducing its dependence on China’s domestic market.
Yet even with lingering uncertainties, Alibaba’s AI ambitions are revitalizing investor confidence, placing the company in a strategic role as a central player in China’s next tech boom.
