Alibaba’s Biggest Rally in Nearly Two Years
Alibaba shares surged more than 15% in Hong Kong trading on Monday, marking the company’s sharpest single-day rise since November 2022. The rally came after the Chinese e-commerce and technology giant reported strong artificial intelligence (AI) revenue growth and better-than-expected results from its cloud computing division.
The gains added over $50 billion to Alibaba’s market value, giving investors a rare bright spot as Asian markets broadly declined following a technology-led selloff on Wall Street last Friday.
The company’s Cloud Intelligence Group recorded a 26% year-on-year revenue increase—the fastest pace of growth in three years—while sales of AI-related products posted triple-digit gains for the eighth consecutive quarter.
AI Takes Center Stage in Alibaba’s Strategy
CEO Eddie Wu highlighted the increasing importance of AI during the earnings call, noting that AI-related revenue now accounts for more than 20% of external customer sales. Wu also emphasized Alibaba’s investments in developing homegrown AI chips to reduce reliance on foreign suppliers and improve efficiency in domestic data centers.
“AI-related products have quickly become a significant part of our revenue base, underscoring their strategic value to our long-term growth,” Wu said.
The company revealed plans to invest 380 billion yuan over the next three years, with 38.6 billion yuan earmarked for AI and cloud infrastructure in the most recent quarter alone. Analysts suggest these investments will further strengthen Alibaba’s competitive edge in China’s rapidly expanding AI sector, where it competes with both domestic firms and international giants like Microsoft and Google.
Mixed Results Across Other Business Units
Despite the upbeat cloud and AI performance, Alibaba’s overall results were mixed. Group revenue came in at approximately 247.7 billion yuan, a modest increase that missed some analysts’ forecasts.
The company continues to face challenges in its food delivery arm, Ele.me, where aggressive competition is putting pressure on profit margins. Analysts caution that while AI and cloud segments are surging, Alibaba must address margin compression across other business lines to maintain long-term stability.
Asian Markets Slide in Contrast
Alibaba’s rally stood in sharp contrast to the broader downturn across Asian markets on Monday. The MSCI Asia Pacific Index slipped 0.2%, dragged lower by technology stocks after Friday’s Wall Street selloff.
Japan’s Nikkei 225 fell 1.8%, with chipmakers leading losses. Samsung Electronics and SK Hynix shares declined sharply after the United States revoked permits for chip gear exports to China, intensifying supply chain concerns.
In South Korea, the Kospi dropped 0.7% despite government data showing record semiconductor exports in August. Indonesian equities also tumbled 1.5% amid political unrest that left six dead and prompted intervention to stabilize the rupiah.
The weakness across Asia mirrored Friday’s retreat in U.S. markets, where the S&P 500 slipped from record highs after Nvidia and other AI-linked stocks stumbled. Analysts attributed part of the downturn to disappointing guidance from Marvell Technology, which signaled weaker-than-expected demand in the months ahead.
Seasonal Weakness Adds Pressure
Market participants also pointed to September seasonality as an added source of investor caution. Historically, September has been the weakest month for the S&P 500 over the past 35 years, with average declines of 0.8%.
U.S. markets were closed Monday for the Labor Day holiday, leaving investors waiting for key economic data later in the week. Employment figures could prove critical for shaping expectations around the Federal Reserve’s next interest rate move.
Charu Chanana, chief investment strategist at Saxo Markets, said Alibaba’s performance underscored a growing sense that Chinese technology firms are closing the gap with U.S. peers in key areas like AI. “Alibaba’s surge reaffirmed the view that China’s tech sector is starting to narrow the distance with global leaders, even as geopolitical risks remain elevated,” Chanana explained.
Outlook for Alibaba and Global Tech
Alibaba’s latest rally demonstrates that investors remain optimistic about the company’s pivot toward AI and cloud computing as core growth engines. The company’s substantial capital commitments suggest it is preparing to play a central role in China’s broader AI boom, despite regulatory scrutiny and global trade restrictions.
However, analysts caution that broader market volatility, particularly tied to U.S.-China technology tensions, could weigh on Alibaba’s momentum. With Washington tightening restrictions on semiconductor exports and global investors reassessing the sustainability of the AI rally, uncertainty remains high.
Still, Alibaba’s strong quarterly showing in AI and cloud services may provide a counterbalance to weak performance in its other units. If the company can sustain growth in these high-margin areas, it could help offset pressures in e-commerce and food delivery.
Conclusion
Alibaba’s 15% surge in Hong Kong marks a milestone moment for the Chinese tech giant, highlighting the growing role of AI in shaping its future. While the company faces challenges in other business units and operates against a backdrop of global market volatility, its cloud and AI segments are becoming powerful engines of growth.
As investors watch both macroeconomic indicators and geopolitical developments, Alibaba’s latest results suggest it is positioning itself as a major contender in the global AI race, providing a rare bright spot amid otherwise cautious market sentiment.
Sources: The Economic Times
