Alibaba’s Hong Kong–listed shares surged more than 19% on Monday as the Chinese tech giant’s cloud computing unit drove strong quarterly results, while details emerged over its new AI chip development.
It’s the highest level for the stock since March. Investors have backed the company’s improving performance in its key cloud unit and are content with the tech giant’s investment into new areas — particularly in the so-called “instant commerce,” which has become incredibly competitive in China.
The Hong Kong rally builds on the momentum of Alibaba’s earnings report on Friday, when the company’s New York–listed shares closed nearly 13% higher.
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Alibaba last week posted revenue for the June quarter of 247.65 billion Chinese yuan ($34.73 billion), marking a 2% year-on-year rise that nevertheless missed analyst expectations. On the upside, a 78% annual surge in net income came in ahead of forecasts.
The Chinese company’s cloud computing unit was a bright spot with revenue picking up by an annual 26%, which was a faster growth rate than seen in the previous quarter. Alibaba’s cloud growth has been accelerating over the last few quarters.
Like some of its Chinese and U.S. tech rivals, Alibaba has been investing in AI infrastructure and developing its own models, as well as selling AI services for its cloud computing unit. Investors see the division as key to the company’s efforts to monetize artificial intelligence, much like Microsoft or Google. AI-related product revenue “maintained triple-digit year-over-year growth for the eighth consecutive quarter,” the company said Friday.
That same day, CNBC reported that Alibaba is developing a new AI chip, which also supported the share price rally on Monday. Sources familiar with the matter told the outlet that the chip is designed for “inferencing” — the stage where AI models are deployed to perform real-world tasks such as image recognition or language processing — rather than “training,” which requires significantly larger computing power and vast data sets. The chip, yet to be launched, was also first reported by The Wall Street Journal, highlighting Alibaba’s latest move in the intensifying race among Chinese technology companies to secure homegrown semiconductors.
Alibaba’s core e-commerce business has meanwhile been showing signs of revival, while the company has jumped into China’s cut-throat instant commerce space. This is a feature introduced this year on Taobao, one of Alibaba’s main Chinese e-commerce apps, which provides deliveries of certain products in China within an hour. Investments in quick commerce weighed on Alibaba’s adjusted earnings for its e-commerce business, but investors have given the company some leeway to invest for now.
Comeback Engine After Regulatory Setbacks
The turnaround in Alibaba’s cloud and AI businesses is seen by analysts as more than just quarterly momentum. For years, the company has struggled under Beijing’s regulatory crackdown on Chinese internet giants, which began in late 2020 after founder Jack Ma’s criticism of financial regulators.
The crackdown scuttled the record-breaking IPO of Ant Group and led to antitrust probes, fines, and stricter oversight, weakening Alibaba’s dominance in e-commerce and shaking investor confidence.
At the same time, Alibaba lost ground in cloud computing to rivals like Huawei and Tencent, both of which capitalized on regulatory pressures facing Alibaba to expand their share in China’s lucrative enterprise market. While Alibaba’s cloud unit was once the undisputed leader in Asia, its growth slowed sharply during this period, raising concerns about its future as a growth driver.
But recent quarters have seen the tide turn. By doubling down on artificial intelligence — investing in infrastructure, launching proprietary models, and now developing in-house chips — Alibaba is positioning its cloud division not just as a services provider but as the backbone of China’s AI economy. The 26% surge in cloud revenue and eight consecutive quarters of triple-digit AI product growth underline the strategy’s effectiveness.
Alibaba’s push into AI and semiconductors signals that the company has found a comeback engine after years of pressure. The combination of cloud services, AI monetization, and homegrown chips offers a path for the company to regain competitiveness against Huawei, Tencent, and even global peers like Microsoft and Google, who are racing to tie their cloud businesses to the AI boom.