Alibaba Group shares surged in Hong Kong trading on Monday, boosted by optimism over its cloud business and improving e-commerce operations.
The stock jumped as much as 19% to HK$137.50 (US$17.64), marking its biggest single-day gain in more than three years. It closed higher by more than 13%.
It was also the top performer on the Hang Seng Index, which rose 2.2%.
The rally followed a 13% surge in the company’s US-listed ADRs on Friday, after Alibaba posted robust quarterly earnings.
Net profit rose 78% year-on-year in the April-June period, driven by strong demand for its cloud computing services and steady performance in retail.
AI drives cloud growth and investor confidence
Cloud revenue rose 26% in the quarter, supported by surging demand for artificial intelligence applications.
Chief Executive Eddie Wu described “AI plus cloud” as one of Alibaba’s two core growth engines, alongside e-commerce.
The results prompted a wave of analyst upgrades.
Daiwa Capital Markets analysts John Choi and Robin Leung said profitability in Alibaba’s quick commerce unit is improving faster than expected, while cloud revenue growth is likely to accelerate as AI adoption scales.
They lifted their Hong Kong target price to HK$180 from HK$170.
Jefferies said Alibaba has achieved its “first-stage goal” in quick commerce by building user growth and consumer mind share.
Nomura analysts raised their ADR price target to US$170 from US$152, noting strength in both e-commerce and cloud.
Quick commerce expansion shows promise but pressures margins
Alibaba’s rapid-delivery service, which delivers orders within an hour, is its latest effort to gain share in China’s on-demand delivery market against rivals JD.com and Meituan.
Analysts believe the segment provides long-term growth potential, though margin pressures are expected in the near term.
Nomura analysts Jialong Shi and Rachel Guo cautioned that while the expansion delivers “much-needed growth,” it could weigh on short-term profitability.
They argued, however, that Alibaba’s strength lies in retail-related quick commerce, which will remain a strategic focus.
Competitive AI race intensifies in China
Alibaba is also pushing forward in artificial intelligence, rolling out upgrades to its open-source video-generating model and launching new agentic AI services and chatbots.
Morgan Stanley analysts described Alibaba as holding “China’s best AI enabler thesis,” suggesting that losses from meal delivery and instant commerce could peak this quarter while cloud continues to grow.
Still, Alibaba faces mounting competition as rivals Baidu and Tencent accelerate their own AI model launches.
Investors are closely watching whether Alibaba can successfully monetize its AI bets while managing margin pressures from quick commerce.
For now, analysts expect quick commerce losses to peak in the September quarter, with AI-driven cloud momentum underpinning earnings growth through the rest of the year.
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