- Third-quarter revenue beat forecasts
- Gains in cloud service and e-commerce
- Shares are up 79% over the past year
Shares in Alibaba (BABA:NYSE) gained over 8% to $135.97 in New York trading after China’s biggest online retail platform reported its fastest pace of revenue growth in more than a year.
The company reported better-than-anticipated revenue of $4.3 billion in cloud service and $13.8 billion in e-commerce for the third quarter, while international commerce sales – driven by marketplaces such as AliExpress – surged by 32%.
COMEBACK KID
Chief financial officer Toby Xu told analysts on Thursday (20 February): ‘Our AI momentum remains robust with AI-related product revenue sustaining triple-digit growth for the sixth consecutive quarter.’
Xu added the firm would ‘aggressively ramp up’ its capital expenditures as part of its AI strategy going forward which excited investors in New York and Hong Kong.
The Chinese e-commerce and tech outfit founded by internet pioneer Jack Ma has also reportedly expressed an interest in directly investing in DeepSeek and partnering with Apple (AAPL:NASDAQ) to bring AI features to its iPhones in China.
BIG INCREASE IN AI SPENDING
Russ Mould, investment director at AJ Bell said: ‘Chinese e-commerce and tech outfit Alibaba excited Hong Kong investors with plans for a big increase in AI spending. Following the emergence of DeepSeek, China has put itself firmly in the artificial intelligence conversation after the theme had been dominated up until now by US names.
‘Alibaba has already made strong progress in 2025 off the back of DeepSeek’s launch and an eye-catching tie-up with Apple to roll-out AI features for iPhones sold in China.
‘The seeming rehabilitation with Beijing of returning founder Jack Ma has also been taken positively after his recent presence at a meeting of Chinese entrepreneurs and the country’s president Xi Jinping.
‘For now, the market appears to be excited about Alibaba’s AI largesse, but in the same way the theme has developed in the US, before long it will want to see some evidence of a tangible return on this investment.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author (Sabuhi Gard) and editor of this article (Ian Conway) own shares in AJ Bell.
