Chinese e-commerce giant Alibaba Group saw strong performance in the stock market on Wednesday, with its U.S.-listed American Depositary Shares (ADS) rising nearly 3% in late trading, significantly outperforming the S&P 500 index, which gained only 0.2% during the same period. This rally was primarily driven by the positive impact of a successful fundraising round.
Alibaba recently announced the completion of a $3.2 billion issuance of zero-coupon convertible preferred notes. Although the specific subscribers were not disclosed, the company explicitly stated that the subscribers are “certain non-U.S. persons.” These notes are convertible into American Depositary Shares, with an initial conversion rate set at approximately 5.18 ADS per $1,000 principal amount. If not converted, the notes will mature in 2032. The company also noted that the conversion rate may be adjusted under certain conditions. Based on the initial conversion price, this equates to $193.15 per ADS, representing a premium of over 31% to the price of its ordinary shares listed in Hong Kong.
Alibaba plans to use the net proceeds from this issuance for general corporate purposes, specifically mentioning the strengthening of cloud infrastructure and supporting the expansion of international businesses. Investors responded positively to this fundraising method, as the issuance of convertible notes neither excessively dilutes existing shareholders’ equity nor places significant pressure on the balance sheet. Currently, Alibaba’s ADS correspond to a market capitalization of nearly $397 billion, while its total debt stood at HK$227 billion (approximately $32 billion) at the end of the latest financial reporting period.
Furthermore, Goldman Sachs pointed out in its latest research report that as enterprises accelerate the adoption of large models and computing demand continues to strengthen, full-stack cloud service providers like Alibaba are ushering in a new wave of growth opportunities. Goldman Sachs believes that Alibaba, with its leading model capabilities, a 47% share of China’s public cloud market, and a diversified chip supply chain, is in a favorable industry position and has the potential to further expand into international markets.
Based on an optimistic outlook for the cloud computing industry, Goldman Sachs raised its target price for Alibaba from $163 to $179, maintaining a “Buy” rating. The firm particularly increased its valuation for Alibaba Cloud—from $36 to $43 per ADS—and raised its growth expectations for Alibaba Cloud for the second to fourth quarters of fiscal year 2026. Goldman Sachs analysts emphasized that Chinese cloud vendors have made progress in self-developed inference chips and are actively pursuing a “multi-chip strategy,” indicating that the development of China’s AI cloud industry is “no longer entirely dependent on overseas chip supply.” This structural shift, coupled with a robust capital expenditure outlook, provides sustained compound growth momentum for the entire industry.
