Alibaba’s shares listed in Hong Kong surged over 19% on Monday, reaching their highest levels since March, driven by strong progress in the company’s cloud computing division and emerging reports about its development of a new artificial intelligence chip.
The rally in Hong Kong followed a notable boost in Alibaba’s New York-listed shares, which rose nearly 13% after the group released its quarterly earnings on Friday. Investor enthusiasm reflects growing confidence in Alibaba’s shift towards technology-driven growth, particularly through cloud services and AI innovation.
For the quarter ending in June, Alibaba posted revenue of 247.65 billion Chinese yuan, a 2% increase compared to the previous year. Although this revenue growth fell short of some analysts’ expectations, net profit saw a remarkable 78% year-on-year jump, highlighting improvements in profitability and cost control.
Alibaba Cloud, the company’s cloud computing arm, stood out as a primary growth engine with annual revenue rising by 26%. This marks an acceleration from recent quarters and places the business among key global cloud service providers competing with Amazon Web Services and Microsoft Azure.
The company has committed significant resources to expanding its cloud infrastructure and service offerings, aligning with increased market demand for digital transformation and AI-enabled cloud solutions.
Alibaba is actively investing in its own artificial intelligence capabilities, developing proprietary models and integrating AI-enhanced services into its cloud platform. The company reported that its AI-related product revenue has maintained triple-digit growth for eight consecutive quarters, showing the growing commercial potential of these technologies.
Further enhancing investor sentiment were reports that Alibaba is designing a new AI chip intended to optimise the performance of its AI workloads. This initiative aims to strengthen the company’s position in AI infrastructure and reduce reliance on third-party hardware providers, a move seen as critical amid ongoing technological competition between China and the U.S.
Alongside technological advances, Alibaba’s core e-commerce business is showing signs of recovery. The firm has also made strides in China’s fiercely competitive “instant commerce” sector, which focuses on delivering products within a very short timeframe. Since introducing quick-delivery services on Taobao, its flagship shopping app, Alibaba has sought to capture the growing consumer demand for convenience.
Although investments in quick delivery have temporarily pressured the profitability of Alibaba’s e-commerce operations, investors appear willing to prioritise growth and innovation over immediate earnings.