Recently, Alibaba’s stock price has shown a strong upward trend, directly stemming from the company’s announcement of a significant increase in investment in the field of artificial intelligence. This strategy aligns with the successful paths of American tech giants, so the market’s positive response is not surprising. At its annual Apsara Conference, Alibaba unveiled a series of major AI initiatives, including establishing a new partnership with NVIDIA, planning to open new data centers globally, and launching a new AI model with over a trillion parameters. These actions are concrete implementations of the company’s previously announced three-year $50 billion AI infrastructure investment plan, demonstrating its determination to become a leading global full-stack AI service provider.
This rise marks a distinct phase for Alibaba’s stock price. Over the past three years, due to changes in the regulatory environment, slowing growth in domestic consumption, and fierce competition from rivals like Pinduoduo, Alibaba’s stock performance was once weak, testing the patience of many investors. However, the story took a turn in 2025. As of recently, its stock price has surged nearly 87% within 12 months, even outperforming the Nasdaq index. This astonishing rebound presents investors with a critical choice: to take profits or continue holding for potentially greater gains?
This stock price recovery is not merely driven by market sentiment. The latest financial reports provide strong support, with the company’s revenue returning to double-digit growth. The performance of its Cloud Intelligence segment was particularly outstanding, achieving a growth rate of 26%. More crucially, its AI-related revenue has maintained triple-digit growth for multiple consecutive quarters. This indicates that Alibaba is successfully transforming from an e-commerce company into a technology platform. Its large language model, “Tongyi Qianwen,” is being widely integrated and applied, solidifying its position as an AI platform. Simultaneously, the company is actively responding to competition in its core e-commerce battleground by investing in areas like fast-moving consumer goods to drive business growth, showing that management is adopting an offensive posture once again.
After the substantial stock price increase, valuation remains a focal point of discussion. Alibaba’s current price-to-sales ratio is significantly lower than its historical peak, resembling that of a traditional retailer more than a high-tech platform. This suggests that if its growth story continues, there may still be room for the stock price to rise. Market sentiment is also just beginning to shift, with several well-known institutions recently raising their target prices, believing the AI potential is not yet fully priced in.
However, challenges should not be overlooked. Competitive pressures on the core e-commerce business persist, investments in new businesses will erode profits in the short term, and geopolitical factors could introduce uncertainty for its cloud computing and AI strategy. These risks mean that future stock price volatility is inevitable.
In summary, Alibaba’s rebound in 2025 results from the combined effect of improved fundamentals, a strengthened AI narrative, and a recovery in market sentiment. Despite facing challenges, the company is showing genuine signs of transformation. For long-term investors, rather than rushing to take profits, it might be more prudent to view this recovery as the beginning of a longer-term process. As long as the company can consistently execute its cloud and AI strategy, this recovery may have further room to run.
