1. Stock performance
Alibaba Group Holding Ltd. (BABA) shares are trading at $135, representing a significant increase of more than $15 during the last trading session. On the Hong Kong Stock Exchange, the shares rose 18%, increasing the company’s market capitalization by approximately $50 billion.
2. Growth in AI and cloud services
The main catalyst for growth is the sharp improvement in performance in the Alibaba Cloud division, which recorded year-on-year revenue growth of 26%. This result exceeded market expectations and strengthened investor confidence in the company’s long-term growth potential. At the same time, Alibaba is investing in the development of its own AI chip in an effort to reduce its dependence on foreign suppliers and compete with industry leaders such as Nvidia.
3. Expected financial results
The company plans to release its first fiscal quarter results soon. Analysts expect:
• Net profit: approximately $3.7 billion
• Revenue: approximately $35.1 billion
Nevertheless, concerns remain about price competition, particularly from JD.com and Meituan, which are putting pressure on margins in the e-commerce segment.
4. Investment and analytical assessment
The planned investment of USD 50 billion in AI infrastructure has received mixed reactions. On the one hand, this strategy strengthens the company’s technological independence, but on the other hand, it represents a significant financial burden corresponding to more than eight times the quarterly profit.
However, analysts continue to recommend the stock as a buy. Benchmark and CFRA have maintained their “Buy” recommendations, with a target price of up to $176. According to TipRanks, the average 12-month target is around $156.6.
5. Risks and geopolitical context
In addition to the financial burden associated with large-scale investments, Alibaba faces significant geopolitical risks, including:
• Growing regulatory pressure from the US
• Potential tariffs on Chinese technology
• Intense domestic competition in the e-commerce and cloud services segment
6. Strategic outlook
Alibaba is positioning itself as a key player on the global technology scene by strengthening its AI and cloud capabilities. Successful monetization of massive investments in AI and the ability to cope with geopolitical challenges will be key to maintaining positive investor sentiment and achieving the expected growth in share value.
