Alibaba Surges 2.57% on AI Cloud Momentum and Policy Tailwinds: Is This the Catalyst for a New Bull Run?

Summary
• Alibaba Group (BABA) surges 2.57% intraday to $171.31, breaking above 52-week highs with $172.80 peak
• AI cloud market share hits 35.8% in H1 2025, outpacing rivals as Qwen app integration gains traction
• Jefferies forecasts 80% incremental market share capture in 2026, aligning with 149% industry growth projections

Alibaba’s 2.57% intraday rally reflects a perfect storm of AI cloud dominance and regulatory tailwinds. With Qwen app integration across Taobao and Amap, the stock trades above 52-week highs amid 35.8% AI cloud market share. Technicals show bullish momentum as MACD (0.83) and RSI (64.4) signal strength, while options liquidity surges in 172.5/175 call chains.

AI Cloud Dominance and Policy Tailwinds Drive Alibaba's Rally
Alibaba’s surge stems from dual catalysts: 35.8% AI cloud market share in H1 2025 and regulatory support for 'AI+ Manufacturing.' The Qwen app’s ecosystem integration—enabling Taobao price comparisons and Amap navigation—creates a sticky AI platform. Jefferies estimates Alibaba could capture 60% market share by 2026, leveraging 149% industry growth. Policy-driven demand for cloud infrastructure, coupled with Qwen’s 700M downloads, underpins this momentum.

Internet Retail Sector Volatility Amid AI-Driven Rebalancing
The internet retail sector shows mixed signals. While Alibaba gains 2.57%, sector leader Amazon (AMZN) declines 2.4%, highlighting divergent AI strategies. Alibaba’s cloud-led AI adoption contrasts with Amazon’s retail-centric approach. Jefferies notes Alibaba’s 40% 2025 AI cloud revenue share versus Amazon’s fragmented AI initiatives, suggesting structural advantages in China’s policy-fueled AI ecosystem.

Options Playbook: High-Leverage Calls and Strategic Puts for Alibaba's AI-Driven Rally
• MACD: 0.8327 (bullish divergence)
• RSI: 64.39 (overbought but trending)
• 200D MA: 138.31 (far below price)
• Bollinger Bands: Price at 163.45 (upper band) vs. 151.95 (middle band)

Alibaba’s technicals signal a continuation pattern. The 200D MA at 138.31 and RSI at 64.39 suggest strong momentum. The Roundhill BABA WeeklyPay ETF (BABW) at 45.72 (+2.35%) offers leveraged exposure. For options, focus on 172.5/175 calls with high leverage and liquidity:

• BABA20260123C172.5:
- Strike: 172.5
- IV: 43.48% (mid-range)
- Leverage: 38.92% (high)
- Delta: 0.4788 (moderate)
- Theta: -0.4722 (high time decay)
- Gamma: 0.0323 (high sensitivity)
- Turnover: 1.2M (liquid)
- Payoff at 5% upside: $179.87 → $7.37 profit
- Key stat: High leverage and gamma make this ideal for directional bets.

• BABA20260123C175:
- Strike: 175
- IV: 43.81% (mid-range)
- Leverage: 50.22% (high)
- Delta: 0.4010 (moderate)
- Theta: -0.4312 (high time decay)
- Gamma: 0.0311 (high sensitivity)
- Turnover: 439K (liquid)
- Payoff at 5% upside: $179.87 → $4.87 profit
- Key stat: High leverage and IV make this a volatility play.

Aggressive bulls should buy BABA20260123C172.5 for 172.5-175 range trading. Watch 172.5 as a critical support level; a break above triggers 175 call rotation.

Backtest Alibaba Group Stock Performance
Following a 3% intraday increase from 2022 to the present, the strategy's performance for BABA shows a 30.00% return, with a benchmark return of 42.97% and an excess return of -12.97%. The strategy's CAGR is 6.91%, with a maximum drawdown of 53.49% and a Sharpe ratio of 0.14, indicating a challenging risk-return profile and significant volatility.

Bullish Setup Confirmed: Alibaba's AI Cloud Momentum Demands Aggressive Positioning
Alibaba’s AI cloud dominance and policy tailwinds confirm a sustainable rally. With 35.8% market share and Jefferies’ 60% 2026 target, the stock is in a high-conviction trade. The 172.5/175 call chains offer leveraged exposure to this momentum. Sector leader Amazon’s -2.4% decline underscores Alibaba’s structural advantage. Investors should prioritize BABA20260123C172.5 for directional bets and monitor 172.5 as a key inflection point.