Alibaba (BABA) Surges 2.5% Amid Yuan Strength and AI Momentum – Is This the Start of a New Bull Run?

Summary
• Alibaba Group (BABA) surges 2.49% intraday to $171.175, hitting a 52-week high of $192.67
• Yuan’s strength against the dollar fuels inflows into Chinese equities, with HSBC noting historical 18% CSI 300 gains during yuan appreciation
• Qwen AI model downloads exceed 700 million on Hugging Face, signaling global adoption of Alibaba Cloud’s AI ecosystem
• Policy tailwinds from China’s AI+ Manufacturing plan and Nvidia H200 chip imports boost cloud-led growth narrative

Alibaba’s sharp intraday rally reflects a confluence of macro and sector-specific catalysts. A stronger yuan is driving capital back into Chinese stocks, while the Qwen AI model’s explosive adoption and regulatory support for cloud infrastructure are reshaping Alibaba’s investment thesis. With the stock trading near its 52-week high and technical indicators flashing bullish signals, the question now is whether this momentum can sustain.

Yuan Strength and AI Adoption Fuel Alibaba's Rally
Alibaba’s 2.49% intraday surge is directly tied to the yuan’s 11% appreciation against the dollar, which historically correlates with 18% average gains in the CSI 300 index. Foreign inflows into Chinese equities have accelerated as investors seek revaluation of undervalued assets. Simultaneously, Alibaba Cloud’s Qwen AI model has surpassed 700 million downloads on Hugging Face, signaling global traction for its open-source AI infrastructure. Regulatory tailwinds, including China’s AI+ Manufacturing action plan and potential approval of Nvidia H200 chip imports, further validate Alibaba’s cloud-led growth strategy. These factors collectively drive demand for Alibaba’s shares as a proxy for China’s AI and cloud expansion.

Internet Sector Mixed as Alibaba Outperforms
While Alibaba’s stock soars, the broader Internet Services & Information sector shows mixed momentum. Amazon (AMZN), the sector’s leader, trades down 1.62% intraday, reflecting divergent narratives between U.S. and Chinese tech stocks. Alibaba’s rally is uniquely tied to yuan-driven capital flows and AI policy support, whereas Amazon’s decline underscores U.S. market concerns over AI-driven margin pressures. This divergence highlights Alibaba’s positioning as a beneficiary of China’s regulatory pivot toward AI and cloud infrastructure.

ETFs and Options Playbook: Leveraging Alibaba’s Bullish Momentum
• KraneShares 2x Long BABA Daily ETF (KBAB): 5.17% intraday gain, ideal for leveraged exposure to Alibaba’s short-term rally
• GraniteShares 2x Long BABA Daily ETF (BABX): 4.51% rise, offers amplified returns with lower volatility than direct stock ownership
• RSI: 64.39 (neutral to overbought), MACD: 0.83 (bullish), 200D MA: $138.31 (well below current price)

Alibaba’s technicals suggest a continuation of its bullish trend. Key support at $146.99 and resistance at $162.50 (200D MA) are critical levels to watch. The KraneShares and GraniteShares ETFs provide leveraged access to this move, while the stock’s 22.67x P/E ratio suggests valuation remains attractive relative to its 52-week high. For options, BABA20260123C170 and BABA20260123C177.5 stand out:

• BABA20260123C170
- Type: Call
- Strike: $170
- Expiry: 2026-01-23
- IV: 43.42% (moderate)
- Leverage Ratio: 33.09%
- Delta: 0.5317 (moderate sensitivity)
- Theta: -0.4929 (high time decay)
- Gamma: 0.0325 (high sensitivity to price changes)
- Turnover: 520,097
- Payoff (5% upside): $179.73 → $9.73 gain per contract
- Why it works: High gamma and moderate delta make it ideal for a 5% move, with high liquidity ensuring smooth entry/exit.

• BABA20260123C177.5
- Type: Call
- Strike: $177.5
- Expiry: 2026-01-23
- IV: 47.75% (high)
- Leverage Ratio: 63.35%
- Delta: 0.3203 (low sensitivity)
- Theta: -0.3929 (high time decay)
- Gamma: 0.0266 (moderate sensitivity)
- Turnover: 624,323
- Payoff (5% upside): $179.73 → $2.23 gain per contract
- Why it works: High leverage ratio and liquidity make it a speculative play for a breakout above $177.5, with theta decay manageable given the short expiry.

Action: Aggressive bulls should consider BABA20260123C170 into a break above $172.66 (intraday high). Conservative investors may use KBAB for leveraged exposure while monitoring $170 as a key psychological level.

Backtest Alibaba Group Stock Performance
The backtest of Alibaba's (BABA) performance after an intraday surge of at least 2% from 2022 to the present shows favorable short-to-medium-term gains. The 3-day win rate is 49.37%, the 10-day win rate is 46.84%, and the 30-day win rate is 48.10%, indicating that BABA tends to have positive returns in the immediate aftermath of such events. The maximum return observed was 4.40% over 30 days, suggesting that there is potential for significant price appreciation following an intraday surge of at least 2%.

Alibaba’s AI and Yuan-Driven Rally: Time to Ride the Wave or Wait for Confirmation?
Alibaba’s 2.49% intraday surge is a compelling mix of macro and sector-specific momentum. The yuan’s strength, Qwen AI’s global adoption, and regulatory tailwinds create a multi-layered catalyst. Technically, the stock’s RSI and MACD suggest a continuation of the bullish trend, while the 200D MA at $138.31 remains a distant floor. Investors should monitor $170 as a critical support level and consider leveraged ETFs like KBAB or BABX for amplified exposure. Meanwhile, Amazon’s -1.62% decline in the sector highlights divergent narratives between U.S. and Chinese tech stocks. Act now: If $172.66 breaks, BABA20260123C170 offers a high-gamma play for a potential 5% move.