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The Alibaba office building stands in Nanjing, Jiangsu province, China, as of August 28, 2024.
Alibaba’s stock experienced a significant upswing in Hong Kong on Friday, following impressive quarterly earnings that highlighted robust growth in its cloud intelligence and e-commerce divisions.
The shares shot up as much as 11% at one point, ultimately closing 9.18% higher.
Nomura, in a Friday analysis, expressed optimism about Alibaba’s e-commerce prospects, predicting a strong outlook for the first half of calendar year 2025, largely fueled by continued trade-in subsidies.
In a move to boost consumer spending, the Chinese government announced last July its plans to deploy 300 billion yuan (approximately $41.5 billion) in long-term special government bonds, aimed at enhancing existing trade-in and equipment upgrade initiatives.
According to Vey Sern Ling, a senior equity advisor at UBP, domestic e-commerce is recovering and moving towards sustainable growth and profitability, with general market sentiment positively impacting China’s technology sector as a whole.
The recent resurgence of Chinese tech stocks is partially attributed to AI startup DeepSeek, which has gained attention for its R1 model, claiming to outperform its U.S. competitors at lower costs.
Experts suggest that Alibaba is entering a critical three-year phase of concentrated investment in artificial intelligence and cloud infrastructure development.
In a notable development, Jack Ma, Alibaba’s founder, who has largely stepped back from the public eye since 2020, attended a rare private meeting with Chinese President Xi Jinping on Monday. During this gathering, Xi emphasized the importance of private enterprises showcasing their capabilities and instilling confidence as they navigate a “new era” for their businesses.
Alibaba has faced significant regulatory scrutiny from Beijing, particularly since 2020, when the company’s financial technology arm, Ant Group, was compelled to abort its initial public offering due to regulatory intervention.
Across the board, Barclays noted that Alibaba is making “significant strides” in its AI-powered cloud initiatives, with the launch of the Qwen 2.5-Max AI foundation model driving substantial demand for AI inference, which now constitutes up to 70% of their new business inquiries.
Barclays acknowledged that such “great opportunities” necessitate considerable investment. Analysts indicated that the forthcoming three years will mark a period of unprecedented investment by Alibaba in AI and cloud infrastructure, potentially exceeding the cumulative investments of the past decade, which amount to roughly 270 billion yuan.
For the quarter ending December 31, Alibaba reported a net income of 48.945 billion yuan (around $6.72 billion), significantly surpassing LSEG expectations of 40.6 billion yuan and more than tripling the figure of 14.4 billion yuan from the previous year.
The company also achieved revenue of 280.15 billion yuan, exceeding analyst predictions of 279.34 billion yuan.
Following the announcement of these results, shares of Alibaba listed in the United States surged by more than 8% on Thursday.
— Contributions to this report were made by CNBC’s Ruxandra Iordache, Evelyn Cheng, and Anniek Bao.
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