Alibaba Shares Surge as Revenue Recovers

Alibaba's shares saw a significant boost on Friday, opening 10 percent higher in Hong Kong to achieve their highest value in over three years. This increase followed the company's announcement of third-quarter revenues that slightly surpassed analysts' forecasts. Additionally, Alibaba revealed plans to enhance its investments in both e-commerce and artificial intelligence (AI).

The e-commerce powerhouse also experienced a notable 8 percent rise in its U.S.-listed shares, marking its largest one-day gain since September of the previous year. At the close of trading, the stock reached $135.97, reflecting confidence among investors.

Wedbush Securities analyst Daniel Ives noted, "Alibaba delivered an inflection point quarter as the company’s cloud business was much stronger than expected, and its AI strategy is gearing up for substantial growth." This sentiment has been echoed by the market's response to Alibaba's performance.

Moreover, recent reports indicated that billionaire investor Ryan Cohen has raised his stake in Alibaba to around $1 billion, suggesting that other investors might also be seeing potential in Alibaba's future prospects. Ives remarked that this could hint at Alibaba's potential as a key player in the AI sector in China.

During a conference call with analysts, Alibaba's CEO Eddie Wu emphasized the transformative potential of AI, describing it as an opportunity that arises once every few decades. Wu stated that the company plans to invest more in AI and cloud technology over the next three years than it has in the previous decade, although he did not announce a specific investment figure.

For the quarter ending December 31, Alibaba reported revenues of 280.15 billion yuan (approximately $38.58 billion), surpassing the 279.34 billion yuan expected by analysts. The company has been actively reducing prices and promoting sales to stimulate consumer spending in its domestic market.

Healthy demand from international markets and increased year-end spending helped boost Alibaba's sales. Its domestic e-commerce units, Taobao and Tmall, recorded a 5 percent revenue growth and company executives mentioned a focus on stabilizing market share moving forward.

Riding the AI Wave

With the start of 2025, Alibaba finds itself at the forefront of China's AI developments, attracting investors with strategic decisions and partnerships. The company's stock has surged over 60 percent since the beginning of this year.

Wu highlighted their commitment to expanding their AI capabilities, stating their goal of developing intelligence models that can reshape industry boundaries, mentioning that AI could eventually influence or even replace a significant portion of the global GDP.

In addition, Alibaba's recent inclusion of co-founder Jack Ma in a state meeting with private enterprise leaders, alongside photographs of Ma with President Xi Jinping, has further bolstered investor confidence in the firm.

Susannah Streeter from Hargreaves Lansdown remarked, "Alibaba has secured a position in the AI sector and is now benefitting from it." The company is collaborating with Apple to integrate its AI solutions into iPhones sold in China, competing with local firms that provide cost-effective alternatives.

Additionally, Alibaba introduced an upgraded version of its AI model, Qwen 2.5, in late January, showcasing enhancements over a rival model.

Revenue from Alibaba's Cloud Intelligence Unit rose by 13 percent. The international segment of its e-commerce business, which includes AliExpress and Alibaba.com, experienced a remarkable 32 percent revenue growth, highlighting its status as one of the company’s fastest-growing areas.

In November, Alibaba announced a strategic merger of its domestic and international e-commerce operations into a single division, known as the Alibaba E-commerce Business Group, bringing together its Taobao, Tmall, and international commerce platforms under one umbrella.

Alibaba, AI, Revenue