Despite a recent dip of over 2%, Alibaba (BABA) now boasts a market capitalization of $385 billion, with its shares having surged 110% year-to-date. The stock has notably jumped 44% in the past month alone, breaking free from a three-year slump during which it consistently traded below $100.
Analysts attribute the rally to Alibaba’s ambitious push into artificial intelligence. Earlier this year, the company pledged to invest at least $52 billion over the next three years in cloud computing and AI infrastructure. Its latest quarterly report, released in late August, highlighted a 26% revenue increase in its cloud intelligence segment, with AI-related product sales growing at triple-digit rates for the eighth consecutive quarter.
On September 24, CEO Eddie Wu Yongming announced further AI initiatives during an internal meeting, including raising the planned $52 billion investment cap, partnering with NVIDIA in robotics and autonomous driving (physical AI), and launching the next-generation large language model Qwen3-Max, which boasts over one trillion parameters. These moves have significantly boosted investor confidence in Alibaba Cloud’s growth prospects.
In its core e-commerce business, Alibaba has optimized costs by integrating consumer platforms. Since introducing instant delivery on the Taobao app, monthly active consumers have grown by 25%, and quick-commerce services have shown strong momentum. Although organic revenue growth of 10% in the June quarter remains below pre-pandemic levels, the market appears more focused on the long-term potential of Alibaba’s AI strategy.
Another key catalyst has been the return of founder Jack Ma. His reappearance at the company’s headquarters, where he participated in strategic planning for AI and e-commerce, has been interpreted as a clear sign of improving regulatory conditions and an end to the multi-year tech crackdown.
Despite the sharp rally, Alibaba’s current price-to-earnings ratio of 20 remains attractive compared to U.S. tech peers. The stock has also gained favor with prominent investors, including billionaires David Tepper and Cathie Wood. Analysts suggest that with regulatory uncertainties fading, now may be an opportune time for medium- to long-term investment as attention shifts back to the company’s fundamentals.
