(Bloomberg) – Alibaba Group Holding Ltd.'s stock was the most acquired around two weeks after the company launched a series of moves aimed at seizing its place in China's AI development boom.
E-commerce leader stocks rose more than 7% in early Hong Kong trading, tracking overnight profits in the US. This brings Chinese companies' profits to more than 80% this year. This is a rally driven by a proactive move to expand into the fledgling field of artificial intelligence.
This week, Alibaba raised $3.2 billion in convertible debt and bankrolled the country's largest AI infrastructure budget and cloud services. We have announced an update to the flagship Qwen series model designed to compete with Deepseek and Openai. And the information reported that Alibaba and Baidu Inc. is beginning to employ in-house chips for artificial intelligence training, replacing the costly Nvidia Corp. Accelerators. Baidu's shares rose close to 13% in Hong Kong, the highest since October 2024.
Alibaba is staged its comeback after years of regulatory scrutiny has hampered its internet business. The company, co-founded by Jack Ma, has established itself this year at the forefront of AI Frenzy across the nation. It has since been declared to be fully pursuing artificial general information, the holy grail of many high-tech companies.
Recent movements are consistent with increasing optimism about the outlook for technology that is expected to revolutionise industry and economy. This week, Oracle Corp. helped set the sectoral rally on fire after providing a thunderous outlook for global AI spending.
“Alibaba's recent move has completely shifted investors' focus to AI possibilities and offset concerns about price wars in food supply,” said Paul Pong, managing director of Pegasus Fund Managers. “The ability to produce our own chips should create more growth drivers.”
Stock profits will be earned as Alibaba fights war with rivals he has deeply burdened on another side.
This week, the company declared it was sinking more money from incentives and subsidies to promote local services and e-commerce businesses. It has committed an additional 1 billion yuan ($140 million) incentive to drive more traffic to one of its most popular online services, closing the heat of JD.com Inc. and Meituan with a continuous battle with Chinese consumers.
Some analysts believe it is positive given that users are difficult to drive their core business. But others point to the erosion of the margin at a time when the possibility of AI monetization remains elusive.
What Bloomberg Intelligence says
Alibaba's latest AI model releases should support the demand for cloud services, including the more efficient QWEN3-NEXT and 1-TRILLION-PARAMETER QWEN-3-MAX-PREVIEW. However, returns from segments are set to remain insufficient, taking into account low margins and disproportionately high capital costs. The quarterly adjusted EBITA for the Cloud Intelligence division increased by just $86 million in the 12 months ended June 2025. Tencent is better positioned to generate short-term AI returns.
– Robert Lee and Jasmine Ryu, analyst
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(Update Baidu's shares from the third paragraph.)
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