Alibaba’s Hong Kong-listed shares surged 15 per cent to close at HK$138.50 on Friday, following an 8 per cent gain overnight in New York, as the company beat analysts’ consensus estimates with better-than-expected profit and revenue in the December quarter, as well as its major tech spending plan.
Its New York-listed shares gained another 4 per cent in pre-market trading on Friday. Alibaba owns the South China Morning Post.
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Alibaba’s AI strategy is “a bit aggressive, but worthwhile” because it is imperative for the company to win in the AI era, said iiMedia Research founder and chief analyst Zhang Yi. “If Alibaba is not a [major] AI company in the future, it will not be favoured by investors in the capital market.”
That assessment lends a sense of urgency to the goal set by Alibaba chief executive Eddie Wu Yongming on Thursday, when he said the company’s next three-year capital outlay on AI and cloud computing infrastructure is expected to exceed what the group has spent over the past decade in building capabilities related to these technologies.
JPMorgan analysts, led by Alex Yao, wrote in a research note that Alibaba’s commitment shows its “strong confidence in [its] general AI monetisation outlook”. The accelerated growth at the firm’s Cloud Intelligence Group – with revenue up 13 per cent to 31.7 billion yuan (US$4.4 billion) in the December quarter from a year earlier – already showed investors the potential benefit of betting big on AI.
Recent accomplishments by Alibaba Group Holding’s cloud computing services and artificial intelligence arm, Alibaba Cloud, are stealing some of the thunder from Chinese AI darling DeepSeek. Photo: Shutterstock alt=Recent accomplishments by Alibaba Group Holding’s cloud computing services and artificial intelligence arm, Alibaba Cloud, are stealing some of the thunder from Chinese AI darling DeepSeek. Photo: Shutterstock>
That AI-triggered market rally saw Alibaba add more than US$110 billion to its market value. Investor excitement for Alibaba has also intensified because of its reported partnership with Apple to support AI features on iPhones in China.
The start-up is globally recognised for developing advanced open-source AI models, V3 and R1, at a fraction of the cost and computing power that major tech companies typically require for large language model (LLM) projects. LLM is the technology underpinning generative AI services such as ChatGPT and DeepSeek’s namesake chatbot.
Open source gives public access to a program’s source code, allowing third-party software developers to modify or share its design, fix broken links or scale up its capabilities. Open-source technologies have been a huge contributor to China’s tech industry over the past few decades.
Earlier this month, Alibaba Cloud’s Qwen family of AI models was credited with the training and development of the world’s top 10 open-source LLMs, according to collaborative machine-learning platform and community Hugging Face.
Alibaba Cloud’s Qwen family of open-source AI models have led to the creation of more than 90,000 models on Hugging Face, the collaborative machine-learning platform and community, according to the company’s latest data. Photo: Shutterstock alt=Alibaba Cloud’s Qwen family of open-source AI models have led to the creation of more than 90,000 models on Hugging Face, the collaborative machine-learning platform and community, according to the company’s latest data. Photo: Shutterstock>
Alibaba, which Jack Ma co-founded in 1999, is also sharpening its focus on developing artificial general intelligence (AGI), Wu said on Thursday. AGI refers to an AI system’s humanlike intelligence and ability to self-teach, performing tasks that it was not necessarily trained for.
The company’s plan to double down on AI and cloud computing investment echoes Ma’s vision for the technology.
In a visit to Alibaba headquarters in Hangzhou last December, Ma gave a rare public speech on the 20th anniversary of fintech affiliate Ant Group, when he declared: “AI will change everything.”
“From today’s perspective, the changes that artificial intelligence will bring in the next 20 years will be beyond everyone’s imagination, as AI will bring a greater era,” he said.
In an opinion piece published by the Post last week, Alibaba co-founder and group chairman Joe Tsai pointed out the importance of “real-world implications that drive economic growth” on the back of AI.
“Capital will go to companies that innovate with lower costs for training and deploying AI,” Tsai wrote.
