Alibaba (BABA) Surges 3.19% on AI Chip Breakthrough and Cloud Expansion Momentum

Summary
• Alibaba Group (BABA) surges 3.19% to $171.15, hitting an intraday high of $172.17
• China Unicom’s $390M data center deal with Alibaba’s T-Head AI chips drives optimism
• Analysts upgrade BABA to 'Buy' as cloud revenue forecasts hit 31–38% CAGR

Alibaba’s stock is surging on a landmark AI chip partnership with China Unicom, signaling a strategic pivot toward self-reliant AI infrastructure. The stock’s 3.19% gain reflects investor confidence in Alibaba’s cloud and AI ambitions, with analysts upgrading the stock and projecting robust revenue growth. The move aligns with Beijing’s push for domestic semiconductor innovation, positioning Alibaba as a key player in China’s AI ecosystem.

China Unicom AI Chip Deal Ignites Alibaba’s Bull Run
Alibaba’s 3.19% intraday surge is directly tied to its $390 million data center partnership with China Unicom, the nation’s second-largest telecom operator. The deal integrates Alibaba’s T-Head AI chips into the new Xining facility, with 72% of the 23,000 chips sourced from Alibaba. This positions the company as a critical supplier of AI hardware, aligning with Beijing’s directive to reduce reliance on U.S. chips like Nvidia’s RTX 6000D. The data center’s planned 20,000 petaflops of computing power underscores Alibaba’s expanding influence in China’s AI infrastructure, fueling investor optimism about its cloud and AI revenue streams.

Cloud Infrastructure Sector Volatile as AWS Outage Sparks Reassessment
The Cloud Infrastructure sector, led by Amazon (AMZN), saw mixed performance amid an AWS outage that disrupted global services. While AMZN’s intraday gain of 1.12% reflects resilience, the outage highlighted vulnerabilities in centralized cloud architectures. Alibaba’s AI-driven cloud expansion contrasts with AWS’s operational challenges, positioning BABA as a beneficiary of China’s push for self-reliant AI infrastructure. The sector’s volatility underscores the importance of diversified cloud strategies, with Alibaba’s hardware-software integration offering a compelling alternative to U.S.-centric models.

Options Playbook: High-Leverage Calls for Alibaba’s AI-Driven Rally
• 200-day MA: $126.25 (well below current price)
• RSI: 31.05 (oversold territory)
• MACD: -2.49 (bearish divergence)
• Bollinger Bands: $155.96 (lower) to $192.27 (upper)

Alibaba’s technicals suggest a short-term bearish trend but a long-term bullish setup. The stock is trading above its 30D MA ($170.27) and near the upper Bollinger Band ($192.27), indicating potential for a continuation of the AI-driven rally. The RSI in oversold territory suggests a possible rebound, while the MACD histogram’s negative value hints at near-term profit-taking. For aggressive bulls, the $170–$175 range represents key support/resistance levels.

Top Options Picks:
• BABA20251031C170 (Call, $170 strike, 10/31 expiry):
- IV: 47.98% (mid-range)
- LVR: 29.56% (high leverage)
- Delta: 0.55 (moderate sensitivity)
- Theta: -0.546 (rapid time decay)
- Gamma: 0.0306 (high sensitivity to price swings)
- Turnover: 1.34M (liquid)
- Why it stands out: High leverage and gamma make this call ideal for a 5% upside scenario (projected price: $179.71), yielding a $9.71 payoff. The moderate delta ensures it benefits from both directional and volatility moves.

• BABA20251031C175 (Call, $175 strike, 10/31 expiry):
- IV: 47.68% (mid-range)
- LVR: 48.63% (high leverage)
- Delta: 0.40 (moderate sensitivity)
- Theta: -0.469 (rapid time decay)
- Gamma: 0.0302 (high sensitivity to price swings)
- Turnover: 1.35M (liquid)
- Why it stands out: This call offers a 55.81% price change ratio and high gamma, making it responsive to Alibaba’s AI-driven momentum. A 5% upside scenario (to $179.71) would yield a $4.71 payoff, balancing risk and reward.

Action Insight: Aggressive bulls should prioritize BABA20251031C170 for a near-term breakout above $175, while BABA20251031C175 offers a safer, high-leverage play if the AI narrative sustains.

Backtest Alibaba Group Stock Performance
Here is the analysis of the “3 % Intraday-Surge” strategy on Alibaba (BABA) from 2022-01-01 to 2025-10-23. We entered at each session’s close whenever that day’s gain was ≥ 3 % from its open, and exited on the first of (1) +25 % gain, (2) -8 % stop-loss, or (3) 10 trading-day timeout.Key take-aways (full details in the interactive panel below):• The strategy compounded to roughly +90 % over the period, translating to an annualized return of ~22 %. • Risk was significant: the worst peak-to-trough drawdown exceeded 45 %. • A Sharpe ratio near 0.68 indicates moderate risk-adjusted performance; returns were not without volatility. • Average winning trade delivered ~11 % versus -7 % for losers; however, the win rate (not shown here) and large drawdowns suggest careful position sizing is essential.Parameter notes: – Stop-loss 8 %, take-profit 25 %, and 10-day maximum hold were chosen as pragmatic defaults to cap downside and lock in outsized moves, given the short-term nature of the signal. Feel free to request alternative thresholds for comparison.You can explore the full back-test metrics and trade list in the interactive module below.Feel free to interact with the panel for detailed trade logs, equity curve, and additional performance metrics, or let me know if you’d like to tweak parameters or test alternative exit rules.

Alibaba’s AI Bet: A High-Velocity Trade for the Next 72 Hours
Alibaba’s AI-driven rally is poised to continue as its China Unicom partnership accelerates cloud infrastructure dominance. The stock’s technicals and options liquidity suggest a short-term target of $175, with the 200D MA ($126.25) acting as a critical floor. Investors should monitor the $170–$175 range for directional clarity, with the BABA20251031C170 call offering the highest reward-to-risk ratio. Meanwhile, Amazon (AMZN)’s 1.12% gain highlights sector-wide optimism, but Alibaba’s hardware-software integration gives it a unique edge in China’s AI race. Act now: Buy BABA20251031C170 into a breakout above $175, or short the 10/31 $167.5 put if the 52W low ($80.06) retests.