Alibaba's market value surges by $87B amid AI development
What's the story
Alibaba Group Holding Ltd is witnessing a revival in investor interest, thanks to its major advancements in artificial intelligence (AI) development.
The company's Hong Kong-listed shares have jumped a staggering 46% since January 13, increasing its market value by almost $87 billion.
The surge beats the Hang Seng Tech Index's 25% gain in the same period, making Alibaba the best performer in China's Big Tech for 2025.
Market dominance
Outperforming tech rivals amid AI optimism
Alibaba's market performance has outpaced that of its rivals, including Tencent Holdings Ltd, Baidu, and JD.com.
This turnaround is especially remarkable considering the company's past challenges with regulatory hurdles and a post-COVID consumption slump.
The recent rally is primarily credited to optimism surrounding Alibaba's efforts to develop its own AI services and platform.
Strategic partnership
Apple's collaboration with Alibaba boosts shares
Alibaba's shares got an additional boost after reports of a possible collaboration with Apple to bring AI features in China.
Andy Wong, the investment and ESG director for Asia Pacific at Solomons Group, said, "The emergence of DeepSeek has sparked a new AI-related catalyst for Chinese tech stocks."
He also emphasized Alibaba's promising earnings growth prospects in the medium term in this sector.
AI advancements
Alibaba's AI investments yield promising results
Alibaba's 2025 recovery is largely attributed to a year-long turnaround spearheaded by Joe Tsai and Eddie Wu, two of Jack Ma's closest associates.
The duo has steered the company back to its core commerce business while also making massive investments in AI.
These strategic moves have begun yielding positive results with Alibaba's Qwen 2.5 Max edition beating Meta's Llama and DeepSeek's V3 model in several tests.
Market hurdles
AI adoption challenges and cloud business growth
Despite Alibaba's progress in AI, challenges remain. Adoption rates have been slower, and domestic consumers and businesses are reluctant to pay for these services.
Cloud business growth for Chinese firms like Alibaba has also been slower than major US counterparts.
However, analysts from JPMorgan Chase & Co see AI as a potential turning point for Alibaba, despite concerns about monetizing these capabilities.