Alibaba Group Holding Ltd. shares surged more than 19 percent in Hong Kong on Friday, the steepest intraday gain since November 2022 after the company reported a sharp increase in artificial intelligence revenue and stronger-than-expected cloud sales.
The rally added over $50 billion to its market value and drove record turnover.
The e-commerce and cloud giant posted a triple-digit percentage rise in AI-related product revenue during the quarter, alongside a 26 percent jump in cloud division sales.
The performance exceeded market expectations and strengthened investor confidence in Alibaba’s positioning within China’s artificial intelligence sector.
Market reaction spread beyond Alibaba as Baidu Inc. gained as much as 5.8 percent and Tencent Holdings Ltd. also advanced. The rally followed weeks of pressure on Chinese internet companies after JD.com Inc. reported a 50 percent drop in quarterly profit and Meituan warned of deeper losses, sparking a $27 billion selloff across the sector.
“Alibaba’s earnings underscore a bifurcation within China tech: AI is delivering scalable growth, while traditional consumer-facing segments remain mired in destructive price competition,” said Charu Chanana, Chief Investment Strategist at Saxo Markets.
Analysts at Morgan Stanley described Alibaba as having “China’s best AI enabler thesis,” citing its ability to monetize computing and AI-driven services while expanding internationally through platforms such as Lazada and AliExpress.
Chief Executive Officer Eddie Wu has declared artificial general intelligence as the company’s primary objective, with record levels of spending committed to AI research and development.
Last week Alibaba upgraded its open-source video generation model, part of a wider push spanning large language models, cloud infrastructure, and AI-enabled commerce tools.
The focus on AI has allowed Alibaba to outperform JD.com and Meituan, which remain heavily dependent on price-driven competition in e-commerce and food delivery.
However, analysts caution that heavy investment in quick commerce continues to weigh on Alibaba’s margins, even as AI and cloud revenue establish new growth drivers.
Alibaba’s sharp rally highlights growing investor preference for companies positioned to benefit from artificial intelligence revenue streams.
The divergence between AI-led growth and traditional commerce pressures is becoming more pronounced across China’s technology sector, reinforcing Alibaba’s position as a benchmark for the country’s AI momentum.