Alibaba shares surge 15% on soaring AI revenues, cloud growth
What's the story
Alibaba Group Holding Ltd's stock surged almost 15%, its biggest intraday gain since February, in Hong Kong. The spike was fueled by the company's strong performance in the artificial intelligence (AI) sector. The e-commerce giant reported a triple-digit percentage increase in revenue from AI-related products on Friday. Its cloud division, closely associated with the AI boom, also witnessed a better-than-expected 26% sales jump, according to Bloomberg.
Market response
AI gains offset revenue concerns
Alibaba's strides in AI have allayed investor fears over a disappointing 2% revenue growth and an unexpected dip in operating income. The company's lead in AI has also helped mitigate worries over a fierce price war with JD and Meituan in the massive food delivery market. This competition had a major impact on the market, with JD's profit halving in the quarter and Meituan warning of major losses.
Stock surge
Ahead of peers in AI
The AI factor has propelled Alibaba's stock ahead of its more commerce-reliant peers this year. The company is also capitalizing on the growth of an international arm that includes some of the world's most popular shopping sites, from Lazada to AliExpress. Alibaba is investing heavily in AI, building large language models to keep pace with a critical tech race.
Strategic direction
Alibaba's aggressive AI push
Alibaba sees AI as key to its future, be it providing cloud computing or creating services to compete with giants like OpenAI and DeepSeek. CEO Eddie Wu had said in February that artificial general intelligence (AGI) is now the company's main goal. Along with AI, Alibaba is also investing in quick commerce, which includes food delivery and instant shopping.
User expansion
Quick commerce driving user growth
Alibaba's commerce chief Jiang Fan has said that investments in quick commerce have already driven a 20% user growth on its main Taobao marketplace. The company believes this fledgling division has grown enough in four months to start achieving economies of scale. Morgan Stanley analysts, including Gary Yu, wrote in a research note that Alibaba has "China's best AI enabler thesis," as losses from meal delivery and instant commerce peak this quarter.