Alibaba shares soar 11% in Hong Kong after stellar earnings as China’s e-commerce sector recovers

Alibaba Reports stellar Quarterly Results, Shares Soar

Alibaba Group Holding Ltd. (BABA) shares surged in Hong Kong on Friday following strong quarterly earnings, driven by growth in its cloud intelligence and e-commerce segments. Teh Chinese tech giant’s shares soared as much as 11%, ultimately closing the day 9.18% higher.

nomura analysts remarked, “We expect the outlook for BABA’s e-commerce business to remain strong in 1HCY25F, driven by the continued trade-in subsidies.”

To stimulate consumption,China implemented a plan last year to allocate 300 billion yuan ($41.5 billion) in ultra-long special government bonds to bolster its trade-in and equipment upgrade policy. This initiative appears to be taking effect, as domestic e-commerce growth is showing signs of recovery towards lasting growth and profitability.

Vey Sern Ling, senior equity advisor at UBP, stated, “Domestic e-commerce growth is recovering toward sustainable growth and profits, and the overall sentiment is boosting the broader China technology sector.”

Chinese tech stocks have experienced a significant rally as the emergence of DeepSeek, a domestic AI startup challenging the US-led AI ecosystem with its R1 model. DeepSeek’s claims of superior performance and substantially lower costs compared to its US counterparts have fueled investor confidence.

A Rare Meeting and A Return to Confidence

Amidst this positive market sentiment, Alibaba founder Jack Ma, who has been largely absent from the public eye as 2020, attended a private meeting hosted by Chinese President Xi Jinping on Monday. During the session, President Xi encouraged private businesses to “display their abilities” and boost their confidence in a “new era” for their operations.

This meeting comes after a period of intense regulatory scrutiny by Beijing. In 2020, Alibaba’s financial technology affiliate, Ant Group, was forced by regulators to cancel its initial public offering.

Investing in the Future: A Commitment to AI and Cloud

Alibaba is taking a proactive approach to capitalize on the growing demand for AI, announcing significant investments in the field. Barclays analysts noted, “the next three-year period will likely be the single period in which Alibaba makes the most concentrated investment in AI and Cloud infrastructure build-out.”

They added that Alibaba’s planned investment over the next three years is projected to exceed the total amount it has spent over the past decade, which is nearly 270 billion yuan.

This commitment to AI and cloud infrastructure is reflected in Alibaba’s recent financial performance. The company reported a net income of 48.945 billion yuan ($6.72 billion) for the quarter ended December 31, surpassing analysts’ expectations of 40.6 billion yuan and more than three times higher than the 14.4 billion yuan recorded in the same period last year.

Alibaba’s revenue for the quarter reached 280.15 billion yuan, also exceeding analysts’ predictions of 279.34 billion yuan. The company’s U.S.-listed shares experienced a surge of more than 8% on Thursday following the release of these remarkable results.

looking Ahead

Alibaba’s remarkable quarterly performance and strategic investments in AI and cloud technology position the company for continued growth and success in the evolving digital landscape. As the company expands its technological capabilities and embraces a renewed era of confidence under President Xi’s leadership, Alibaba is poised to play a pivotal role in shaping the future of e-commerce, cloud computing, and artificial intelligence in China and beyond.

What do you think are the key areas Alibaba should focus on to maintain its growth momentum?

Alibaba’s Resurgence: A Conversation wiht Dr. Liu Meilan, Chief Strategist at ChinaTechInsights

Alibaba’s Stellar Quarterly Results: A Reflection of China’s E-commerce Recovery?

Dr. liu Meilan, Chief Strategist at ChinaTechInsights

Dr. Liu, thank you for joining us today to discuss Alibaba’s recent quarterly results. Let’s start with the elephant in the room.The Chinese tech giant’s shares surged by nearly 10% following its earnings report. What’s driving this growth?

Dr. Liu: Thank you for having me. Alibaba’s growth can be attributed to several factors. Firstly, the company’s e-commerce segment continues to perform exceptionally well, driven by trade-in subsidies and government initiatives. Nomura analysts also expect this momentum to continue in the near future.

China’s Government Bond initiative: Stimulating E-commerce Growth

Speaking of government initiatives, the Chinese government allocated 300 billion yuan last year to bolster its trade-in and equipment upgrade policy.How is this benefiting Alibaba and the broader e-commerce industry?

Dr. Liu: This initiative has certainly boosted e-commerce growth,as seen in Alibaba’s latest results. By stimulating consumption, the government bonds are helping the e-commerce sector recover towards enduring growth and profitability. Vey Sern Ling from UBP echoed this sentiment, highlighting the overall positive sentiment in the China tech sector.

The AI Factor: DeepSeek’s Impact on Chinese Tech Stocks

DeepSeek, a domestic AI startup, has been making waves with its R1 model, challenging US-led AI ecosystems and boosting investor confidence. how is Alibaba positioning itself in this AI race?

Dr.Liu: Alibaba is taking a proactive approach,announcing important investments in AI over the next three years. Barclays analysts expect this period to be the company’s most concentrated investment in AI and cloud infrastructure to date. This commitment bodes well for Alibaba’s long-term strategy and growth potential.

Jack Ma’s Return: A Vote of Confidence in ‘A New Era’ for Businesses

Amidst this positive market sentiment, Alibaba founder Jack Ma recently attended a private meeting hosted by President Xi Jinping. How significant is this meeting, given Jack Ma’s public absence in recent years?

Dr. Liu: This meeting is indeed significant. It signals that the Chinese government is encouraging private businesses to play a more prominent role in the country’s economic growth. president Xi’s encouraging of businesses to ‘display their abilities’ and boost their confidence can be seen as a vote of confidence in the private sector. This move should further boost Alibaba’s confidence and growth prospects.

Looking Ahead: Can Alibaba Maintain This Momentum and Drive China’s Digital Future?

With remarkable quarterly results and strategic investments in AI and cloud technology, Alibaba seems primed for continued success. Though, the digital landscape is evolving rapidly. How can Alibaba maintain this momentum and stay ahead of the curve?

dr. Liu: To maintain its momentum, Alibaba must continue to innovate, adapt, and capitalise on emerging trends. The company’s commitment to AI and cloud infrastructure is a step in the right direction. Moreover, Alibaba should leverage its e-commerce strengths to explore new opportunities, such as the growing consumer market in lower-tier cities. By focusing on these areas, Alibaba can remain a driving force in China’s digital future?

What do you think are the key areas Alibaba should focus on to maintain its growth momentum? Share your thoughts in the comments below.