Alibaba Group Holding Ltd. has seen its Hong Kong-listed shares surge 46% since hitting a low in January, making it the best performer in China’s Big Tech universe this year. The company’s efforts to develop its own AI services and platform have gained traction after Chinese AI startup DeepSeek unveiled technologies that caused a market rout on Wall Street.
Optimism about Alibaba’s growth prospects is attributed to its well-established earnings growth, led by Jack Ma’s lieutenants Joe Tsai and Eddie Wu, who took the helm in 2023. The company has been investing in promising startups, including Moonshot and Zhipu, and prioritized expanding its cloud business to support AI development.
While Alibaba’s rally is seen as a surprise reversal of fortunes, investors are cautiously optimistic about its potential for growth. Analysts estimate that cloud revenues for the December quarter rose 9.7% at Alibaba, compared with 19% at Amazon.com Inc. and 31% at Microsoft Corp.
The company’s financial results scheduled next Thursday are expected to offer a fresh opportunity to learn about its progress on AI models and outlook for its cloud services. Derivative traders are boosting their bets, with options contract volumes reaching their highest level in over four months.
Despite the rally, Alibaba’s stock is still undervalued compared to its U.S. tech peers, according to some investors. The company’s expansion into overseas marketplaces may reduce its reliance on the domestic Chinese market and drive future growth.
Source: https://fortune.com/asia/2025/02/13/alibaba-shares-rally-china-ai