Alibaba Group Soared 2.89%, What Hidden Catalysts Ignited This Surge?

Summary
• Alibaba Group (BABA) traded at $120.71, up 2.89% from $117.38
• Intraday high reached $121.325, low at $117.52
• Turnover hit 8.2M shares, with 52-week range of $73.87–$148.43
• Bernstein maintains a buy rating with a HK$141 price target

Alibaba Group’s stock surged over 2.8% in a single session, fueled by a confluence of AI-driven product launches, institutional buy ratings, and robust options chain activity. The rally coincided with the company’s debut of AI-powered smart glasses and a strategic push into generative AI, sparking renewed investor optimism. With volume and turnover surging, the market is dissecting whether this momentum will translate into sustained growth or a short-term correction.

AI Innovation and Institutional Confidence Drive BABA's Rally
Alibaba’s 2.89% intraday gain was catalyzed by three key factors: the launch of Quark AI Glasses, Bernstein’s bullish price target, and a surge in options buying. The AI smart glasses, leveraging Alibaba’s large language models, positioned the company as a contender in the wearable tech race. Meanwhile, Bernstein analyst Robin Zhu reaffirmed a Buy rating with a HK$141 target, citing undervalued blue-chip potential. Technically, the stock broke above the 200-day moving average ($109.6) and closed near the upper Bollinger Band ($127.5), signaling short-term bullish momentum. Options data reinforced this narrative, with heavy call buying at strike prices above $120.

Internet Retail Sector Mixed as Amazon Outperforms
While Alibaba surged, the broader Internet Retail sector showed divergence. Amazon (AMZN) rose 1.86%, reflecting its dominance in e-commerce and cloud computing. Alibaba’s AI initiatives, including smart glasses and cloud infrastructure, aim to close the gap, but Bernstein’s $141 target implies a 15% upside from current levels. However, Amazon’s $2.48T market cap and global logistics network still present a structural advantage.

Strategic Options Plays and ETF Alignment for BABA’s Bull Run
• MACD: 1.58 (above signal line 0.95), Histogram: 0.63 (bullish divergence)
• RSI: 69.3 (overbought but not extreme)
• 200-day MA: $109.6 (below current price), 30-day MA: $114.5 (below)

Technical indicators suggest Alibaba is in a short-term bullish phase, with the 200-day MA acting as a critical support level. The stock’s proximity to the upper Bollinger Band ($127.5) indicates a potential overbought condition, but the MACD’s positive divergence and RSI’s 69.3 suggest momentum remains intact. Given the options chain’s liquidity and leverage ratios, two contracts stand out:

• BABA20250808C120 (Call, $120 strike, 8/8 exp):
- IV: 36.11% (moderate)
- LVR: 37.54% (high leverage)
- Delta: 0.566 (moderate sensitivity)
- Theta: -0.3386 (aggressive time decay)
- Gamma: 0.0574 (high sensitivity to price)
- Turnover: 841K (liquid)
- Payoff at 5% upside ($126.74): $6.74/share
- This contract offers asymmetric upside with high gamma and moderate delta, ideal for a continuation of the AI-driven rally.

• BABA20250808C121 (Call, $121 strike, 8/8 exp):
- IV: 35.9% (moderate)
- LVR: 44.93% (high leverage)
- Delta: 0.508 (moderate sensitivity)
- Theta: -0.3213 (aggressive time decay)
- Gamma: 0.0585 (high sensitivity to price)
- Turnover: 179.5K (liquid)
- Payoff at 5% upside ($126.74): $5.74/share
- This contract balances leverage and liquidity, making it suitable for a controlled bullish bet with defined risk.

Aggressive bulls should consider BABA20250808C120 into a test of the $126.74 target, while BABA20250808C121 offers a more conservative entry. Both contracts benefit from high gamma and moderate delta, aligning with the stock’s current momentum.

Backtest Alibaba Group Stock Performance
After an intraday surge of more than 3% for BABA, the win rate for the following 3 days is 46.56%, for 10 days is 46.56%, and for 30 days is 44.16%. The average returns over these periods are 0.01% for 3 days, 0.06% for 10 days, and -0.75% for 30 days, with a maximum return of 0.08% on day 5.

Bullish Momentum Unlikely to Fade—Position for AI-Driven Growth
Alibaba’s rally appears rooted in strategic AI advancements and institutional validation, with technicals favoring a continuation above $120. The 200-day MA at $109.6 and the upper Bollinger Band at $127.5 form a key range for near-term direction. If the stock holds above $117.3 (30-day support), the AI narrative and Bernstein’s $141 target could drive further gains. Amazon (AMZN), up 1.86%, remains a sector benchmark, but Alibaba’s product innovation may narrow the gap. Investors should prioritize BABA20250808C120 for high-leverage exposure, while monitoring the $126.74 level for a potential breakout. Watch for $117.3 support breakdown or regulatory clarity on AI initiatives to confirm the trend’s durability.