Alibaba's stock is on a wild ride. Shares in Hong Kong skyrocketed by 10% on Friday, reaching their highest point in over three years. This impressive surge comes hot on the heels of the Chinese e-commerce giant reporting third-quarter revenues that just edged past analysts' expectations. This positive news sent Alibaba's US-listed shares soaring as well. They jumped by a whopping 8% on Thursday, marking their biggest single-day percentage gain since September last year. This surge pushed the shares to close at a three-year high of US$135.97. But that's not all—Alibaba also announced plans to double down on investments in its core e-commerce business and the ever-promising field of artificial intelligence.
Analysts are optimistic about Alibaba's e-commerce outlook, particularly in the first half of 2025, citing continued government trade-in subsidies as a key driver. China's initiative to allocate 300 billion yuan ($41.5 billion) in ultra-long special government bonds to boost trade-in programs and equipment upgrades appears to be paying off, stimulating domestic consumption and benefiting Alibaba's core business. Experts note the recovery of domestic e-commerce growth towards sustainable levels and increased profitability, which is boosting overall sentiment in the Chinese tech sector.
The recent emergence of AI startup DeepSeek, with its competitive R1 model, has ignited enthusiasm for the domestic AI landscape. This surge in interest coincides with Alibaba's significant strides in its AI cloud business, particularly after launching its Qwen 2.5-Max flagship AI foundation model. Barclays highlighted a sharp increase in demand for AI inference, representing a substantial portion of Alibaba's new demand.
Alibaba is clearly positioning itself to capitalize on this AI boom. Barclays predicts that the next three years will represent Alibaba's most concentrated period of investment in AI and cloud infrastructure, exceeding the combined spending of the past decade, which totaled nearly 270 billion. This massive investment underscores Alibaba's commitment to becoming a major player in the rapidly evolving AI landscape.
Adding to the positive momentum, Alibaba founder Jack Ma, who has maintained a low profile since 2020, recently participated in a private meeting hosted by Chinese President Xi Jinping. Xi's encouragement for private businesses to "display their abilities" and boost confidence in their “New Era” of operation and signals a potential easing of the regulatory pressures that have plagued Chinese tech giants in recent years. This suggests a more supportive environment for companies like Alibaba moving forward.
Alibaba blew past market expectations with stellar financial results. Net income for the quarter ending December 31st tripled year-over-year, reaching a staggering 48.945 billion yuan ($6.72 billion), significantly outperforming LSEG estimates of 40.6 billion yuan. Revenue also exceeded forecasts, hitting 280.15 billion yuan compared to the anticipated 279.34 billion yuan.
On February 20, these impressive figures ignited an 8% surge in Alibaba's US-listed shares. This strong performance, combined with strategic investments in AI, growth in cloud and e-commerce, and a potentially more relaxed regulatory landscape, paints a picture of a powerful comeback for Alibaba. The company's focus on innovation, especially in the booming field of AI, positions it well for continued success in the dynamic Chinese tech market.