Alibaba Group Surges 5.27% on Regulatory Hints and AI Ambitions: Is This a Rebound Play?

Summary
• Alibaba Group (BABA) surges 5.27% to $154.49, rebounding from a 21-day EMA break.
• Intraday range of $145.29–$155.29 highlights volatile recovery after Morgan Stanley’s price target cut.
• Options chain shows aggressive bullish positioning with 150-strike calls trading at 169% leverage.
• Sector peers like Amazon (AMZN) rise 1.74%, but Alibaba’s AI-driven logistics and cloud bets stand apart.
Alibaba’s sharp rebound follows a Bloomberg report hinting at Chinese regulatory approval for Nvidia H200 chip imports, sparking optimism for cloud infrastructure demand. The stock’s 5.27% gain—its largest intraday move since October—has ignited a short-term technical reversal, with options traders piling into leveraged calls as the stock tests key resistance levels.

Regulatory Green Light and AI Infrastructure Optimism Drive Alibaba’s Rally
Alibaba’s 5.27% surge stems from a Bloomberg report indicating Chinese officials are preparing to allow limited imports of Nvidia’s H200 AI chips, a critical component for its cloud computing division. This follows a Morgan Stanley downgrade earlier in the week that cut its price target to $180, citing concerns over core e-commerce margins. The regulatory signal has reignited investor confidence in Alibaba’s AI-driven logistics and cloud infrastructure, with analysts noting the company’s recent AI restaurant tools and Meituan competition strategy. Additionally, the stock’s retest of the 21-day EMA ($156.58) has triggered algorithmic buying, amplifying the short-term momentum.

Internet Retail Sector Mixed as Amazon Leads, Alibaba’s AI Play Diverges
The Internet Retail sector shows mixed momentum, with Amazon (AMZN) rising 1.74% on strong holiday e-commerce sales. However, Alibaba’s AI-focused infrastructure bets—such as its cloud AI models and logistics automation—position it differently from traditional e-commerce peers. While Amazon dominates global retail, Alibaba’s recent AI-driven initiatives in food delivery and supply chain optimization highlight a strategic pivot toward high-margin tech services. This divergence explains why Alibaba’s rally isn’t fully aligned with sector trends, as investors price in its unique AI-driven growth narrative.

Leveraged Calls and ETFs Highlight Bullish Setup Amid Technical Reversal
• 200-day MA: $137.79 (below current price)
• RSI: 46.32 (neutral)
• MACD: -2.07 (bearish) vs. Signal Line: -2.44 (bullish crossover)
• Bollinger Bands: Price at $154.49 (near upper band at $159.10)
• Support/Resistance: 200D range of $119.16–$120.96 vs. 30D range of $149.76–$150.12
Alibaba’s technicals suggest a short-term reversal, with the 21-day EMA acting as a psychological hurdle. The Roundhill BABA WeeklyPay ETF (BABW) offers 6.85% leverage, ideal for aggressive bulls. For options, two contracts stand out:
• BABA20260116C150: Call option with 169.01% leverage, 39.04% IV, and 0.7015 delta. High liquidity (1.4M turnover) and theta of -0.4895 make it ideal for a 5% upside scenario (projected payoff: $7.97/share).
• BABA20260116C145: Call option with 116.10% leverage, 36.37% IV, and 0.8762 delta. High gamma (0.0231) and turnover (556,962) suggest strong directional bias. Projected payoff under 5% upside: $12.22/share.
Aggressive bulls should consider BABA20260116C150 into a break above $156.58 (21-day EMA) or BABA20260116C145 for a lower-cost entry if the stock consolidates near $150.

Backtest Alibaba Group Stock Performance
Backtesting the performance of BABA after a 5% intraday increase from 2022 to the present reveals a strategy that underperformed the market. The strategy's CAGR was 6.91%, trailing the benchmark by 12.97%. With a maximum drawdown of 0.00% and a Sharpe ratio of 0.14, the strategy had low risk but modest returns.

Alibaba’s AI-Driven Rebound Gains Momentum: Key Levels to Watch
Alibaba’s 5.27% surge reflects a short-term technical reversal fueled by regulatory optimism and AI infrastructure bets. While the 21-day EMA ($156.58) remains a critical hurdle, the stock’s retest of the 200-day MA ($137.79) suggests a potential base-building phase. Investors should monitor the 150-strike calls (BABA20260116C150) for a continuation signal or the 145-strike (BABA20260116C145) for a lower-risk entry. In the sector, Amazon’s 1.74% gain underscores broader retail strength, but Alibaba’s AI-driven logistics edge could outperform if the $156.58 level holds. Watch for a break above $156.58 or a breakdown below $143.65 (lower Bollinger Band) to confirm direction.