Alibaba's Hong Kong Shares Surge 19% Amid AI-Fueled Cloud Growth

Alibaba's Hong Kong shares surged 19% on Monday, driven by strong growth in its cloud computing division, fueled by the ongoing AI boom. The company's revenue rose 2% YoY, despite growing competition in the global AI and cloud services market.

Alibaba's Hong Kong shares surged 19% on Monday, driven by strong growth in its cloud computing division, fueled by the ongoing AI boom. The company's revenue rose 2% year-over-year (YoY) to 247.65 billion Chinese yuan ($34.6 billion), despite growing competition in the global AI and cloud services market [1].

Alibaba's cloud computing unit reported a 26% YoY revenue increase to 33.4 billion yuan, outpacing the 18% growth seen in the previous quarter. This acceleration was driven by robust demand for AI services, with AI-related product revenue maintaining triple-digit year-over-year growth for the eighth consecutive quarter [1]. The division's 33% market share in China's cloud services sector, surpassing competitors like Huawei and Tencent, underscores its competitive edge [2].

The company's AI-driven cloud growth is a strategic pivot away from its retail-centric model, positioning cloud as a high-margin growth engine. Alibaba's investment in AI chips, servers, and data centers, alongside open-source initiatives, has lowered barriers for enterprise adoption and boosted its cloud division's EBITA growth to 72% in 2025 [2].

However, Alibaba's core e-commerce business, which accounts for over 50% of revenue, faced mixed results. Overall revenue rose 10% YoY to 19.6 billion yuan, but adjusted earnings fell 21% due to heavy investments in instant commerce. The company's quick commerce division brought in revenue of over 14.8 billion yuan, rising 12% YoY, but this investment is expected to add 1 trillion yuan in annualized incremental gross merchandise value (GMV) within the next three years [1].

Analysts remain optimistic, with 86% of recent calls rating Alibaba as a "Buy" or "Moderate Buy," with an average price target of $159.67. The investment case for Alibaba hinges on its ability to leverage AI and cloud to offset e-commerce headwinds, positioning the cloud division as a durable cash generator [2].

References:
[1] https://www.cnbc.com/2025/08/29/alibaba-baba-june-quarter-2025-earnings-report.html
[2] https://www.ainvest.com/news/alibaba-ai-driven-cloud-surge-strategic-buy-opportunity-commerce-headwinds-2509/