ARK Bets on Alibaba's AI-Driven Cloud Comeback After 4-Year Hiatus

ARK Invest has reopened its position in Alibaba Group Holding Ltd. (NYSE: BABA) for the first time in four years, investing approximately $16.3 million across two of its exchange-traded funds (ETFs) on September 22, 2025. This move marks a return to Chinese internet stocks for the firm, which had curtailed its exposure to the sector following regulatory crackdowns in 2021 and 2022. The investment coincides with Alibaba’s stock surging to multi-year highs, driven by optimism over its artificial intelligence (AI) initiatives and cloud computing growthCathie Wood buys Alibaba after four years in China comeback^[1].

Alibaba’s American depositary receipts (ADRs) reached their highest levels since November 2021 on September 23, having nearly doubled year-to-date. The stock’s rally has been fueled by its AI-driven cloud services and strategic investments in AI infrastructure, including a $100 billion commitment to R&D and cloud platformsCathie Wood buys Alibaba after four years in China comeback^[1]. ARK’s decision to re-enter the stock aligns with its focus on disruptive technologies, a theme central to its investment strategy under founder Cathie Wood. The firm also increased its stake in Baidu Inc. (NASDAQ: BIDU) to $47 million, further signaling confidence in China’s tech sectorCathie Wood buys Alibaba after four years in China comeback^[1].

ARK’s ETFs, including ARK Innovation ETF (ARKK) and ARK Next Generation Internet ETF (ARKF), have historically prioritized high-growth technology plays. Despite a net outflow of $438 million in 2025, the firm has maintained a bullish stance on AI and cloud computing, sectors where Alibaba and Baidu are key playersCathie Wood buys Alibaba after four years in China comeback^[1]. The investment in Alibaba represents a calculated risk, as the company navigates regulatory uncertainties in China and geopolitical tensions affecting cross-border tech investments. However, Alibaba’s cloud division reported 26% year-on-year revenue growth in the April–June quarter, with AI-related products maintaining triple-digit growth for eight consecutive quartersCathie Wood buys Alibaba after four years in China comeback^[1].

The firm’s broader portfolio includes smaller stakes in companies like Pony AI Inc. and JD Logistics, though these remain secondary to its focus on AI and cloud infrastructureCathie Wood buys Alibaba after four years in China comeback^[1]. ARK’s strategy reflects a broader trend of institutional investors re-engaging with Chinese tech stocks after years of caution. Alibaba’s market capitalization has nearly doubled to $392.8 billion since the start of 2025, outperforming the Hang Seng Index’s 32.33% gain in the same periodCathie Wood buys Alibaba after four years in China comeback^[1]. Analysts attribute this outperformance to Alibaba’s leadership in cloud services, with a 33% market share in China, and its expansion into international e-commerce through platforms like AliExpressCathie Wood buys Alibaba after four years in China comeback^[1].

While ARK’s investment signals renewed confidence in Alibaba’s long-term prospects, risks remain. Regulatory pressures in China, U.S.-China trade tensions, and competitive challenges from rivals like JD.com and PDD Holdings could impact profitability. Additionally, Alibaba’s core e-commerce business faces margin compression due to heavy investments in “quick commerce” initiatives, which aim to deliver products within an hour in China’s lower-tier citiesCathie Wood buys Alibaba after four years in China comeback^[1]. Despite these challenges, ARK’s move underscores a belief in Alibaba’s ability to leverage AI and cloud computing to drive sustainable growth, even as it balances short-term operational costs with long-term strategic goalsCathie Wood buys Alibaba after four years in China comeback^[1].