The frenzy over Chinese artificial intelligence (AI) is turning Alibaba Group Holding Ltd (阿里巴巴) into an investor favorite again, injecting new life into an e-commerce giant that had nearly sunk into obscurity following a years-long regulatory crackdown.
Alibaba’s Hong Kong-listed shares have surged 46 percent since hitting a 2025 low on Jan. 13, expanding its market value by nearly US$87 billion and exceeding the Hang Seng Tech Index’s 25 percent gain in the same period. That makes the stock by far the best performer in China’s Big Tech universe in the new year, outshining rivals Tencent Holdings Ltd (騰訊), Baidu Inc (百度) and JD.com Inc (京東).
It marks a surprise reversal of fortunes for Alibaba, which had fallen out of favor among investors after its business suffered from Beijing’s clampdown on the country’s tech behemoths and a post-COVID-19 consumption slump. Behind the rally is optimism about Alibaba’s efforts to develop its own AI services and platform, which gained traction after Chinese AI start-up DeepSeek (深度求索) unveiled technologies that caused a rout on Wall Street.
Photo: Reuters
Alibaba’s shares got another shot in the arm yesterday, after The Information reported that Apple Inc is working with the e-commerce pioneer to roll out AI features in China.
“The emergence of DeepSeek has sparked a new AI-related catalyst for Chinese tech stocks,” said Andy Wong (黃耀宗), investment and ESG director for Asia Pacific at Solomons Group. “Within this space, we see Alibaba as having more tangible and well-established earnings growth prospects in the medium term.”
Since the advent of ChatGPT in late 2022, Alibaba has invested in a clutch of China’s most promising start-ups, including Moonshot (月之暗面) and Zhipu (智譜). The company prioritized the expansion of the cloud business that underpins AI development, slashing prices to win back the customers that fled to rivals during the turbulent years. It also decided to spend on AI, joining a race led by Baidu at the time.
Last month, that effort yielded initial fruit. Alibaba published benchmark scores showing its Qwen 2.5 Max edition scored better than Meta Platforms Inc’s Llama and DeepSeek’s V3 model in various tests. The company is now considered a leading player in AI alongside big names from Tencent to ByteDance Ltd (字節跳動) and start-ups including MiniMax (稀宇科技) and Zhipu.
But it’s still early days.
A key hurdle facing Chinese AI firms has been the slower adoption and lack of willingness to pay for services among domestic consumers and businesses.
“Many hedge funds and long-only investors see AI as a potential inflection point for Alibaba, with some expressing interest in understanding the valuation of Alibaba’s cloud business and any upside from large language models,” JPMorgan Chase & Co analysts including Alex Yao (姚橙) wrote in a note. “The AI narrative is seen as a driver for potential re-rating, but there are concerns about the monetization of AI capabilities.”
In addition, cloud business growth for Chinese hyperscalers has lagged that of major US peers so far. Analysts estimate cloud revenues for the December quarter rose 9.7 percent from a year ago at Alibaba and 7.7 percent at Baidu, compared with 19 percent at Amazon.com Inc and 31 percent at Microsoft Corp.
Alibaba’s financial results scheduled on Thursday next week are expected to offer investors a fresh opportunity to learn about the company’s progress on its AI models and outlook for its cloud services.
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