Alibaba Q3 FY24 Earnings: Strong AI and Cloud Growth Drive 10% Stock Surge

Alibaba (BABA) reported Q3 FY24 revenue of RMB 280.15 billion ($38.58 billion), exceeding the analyst consensus of RMB 277.37 billion. Adjusted earnings per ADS came in at RMB 21.39, beating estimates of RMB 19.12. The strong results were driven by robust growth in e-commerce, AI-related cloud computing, and international expansion.

Despite concerns over a potential "sell the news" reaction following a 50% year-to-date rally, the stock surged 10% in response to accelerating AI-related cloud revenue. Alibaba’s earnings highlight substantial progress in its AI-driven strategy, with CEO Eddie Wu emphasizing the company’s focus on innovation and monetization.

Key Segment Performance

Taobao & Tmall Group: Revenue rose 5.4% YoY to RMB 136.09 billion, exceeding expectations of RMB 131.72 billion, reflecting strong customer engagement and improved monetization.

Alibaba International Digital Commerce: Delivered an impressive 32% YoY growth to RMB 37.76 billion, fueled by strength in cross-border commerce.

Local Services Group: Posted 12% YoY growth to RMB 16.99 billion, slightly below expectations of RMB 17.2 billion, with Amap and Ele.me driving order volume.

Cainiao Logistics: Revenue declined 0.8% YoY to RMB 28.24 billion, missing estimates of RMB 31.36 billion as the company restructures operations.

Cloud Intelligence Group: Revenue increased 13% YoY to RMB 31.74 billion, surpassing expectations of RMB 30.78 billion. AI-related product revenue saw triple-digit growth for the sixth consecutive quarter.

Digital Media & Entertainment: Grew 7.9% YoY to RMB 5.44 billion, slightly above estimates.

AI and Cloud: The Core Growth Drivers

Alibaba’s Cloud Intelligence Group delivered 13% YoY revenue growth, with AI-driven product sales maintaining a triple-digit growth trajectory. CEO Eddie Wu highlighted plans to significantly increase AI infrastructure investment over the next three years, surpassing the company’s past decade of spending.

Alibaba’s advancements in AI-driven cloud services are gaining recognition. The company’s Qwen2.5 AI model is outperforming local competitors, positioning Alibaba as a dominant player in China’s AI market. Additionally, its collaboration with Apple on AI-powered iPhones is expected to drive further adoption.

E-Commerce and Chinese Consumer Trends

Alibaba’s 5.4% growth in domestic e-commerce sales suggests steady Chinese consumer demand, despite macroeconomic concerns. Management noted that stimulus measures and interest rate cuts are supporting retail activity, but discretionary spending remains uneven.

International e-commerce saw 32% growth, led by AliExpress, Lazada, and Trendyol, as Alibaba expands aggressively in Europe and the Gulf region. The company is investing heavily in global user acquisition, with mixed profitability trends.

Stock Price Action and Technical Analysis

Ahead of earnings, BABA stock had surged 50% YTD, reaching its highest level since early 2022. Despite concerns of a pullback, shares jumped 10% post-earnings, fueled by AI optimism and strong guidance.

Technically, Alibaba recently broke out above a cup-with-handle formation at $103.67, reaching a new multi-year high of $129.02. With momentum intact, investors will be watching whether BABA can sustain this rally amid broader China market volatility.

Conclusion: AI Momentum Fuels BABA’s Growth Outlook

Alibaba’s better-than-expected Q3 results reinforce its leadership in AI, cloud computing, and global commerce. While China’s retail recovery remains gradual, Alibaba’s expanding AI-driven cloud ecosystem and international footprint provide strong growth catalysts. The stock’s post-earnings surge suggests investors are increasingly confident in Alibaba’s transformation strategy and AI-driven future.