(Bloomberg) — Alibaba Group Holding Ltd.\u2019s stock gained the most in about two weeks after the company initiated a series of moves intended to shore up its place in China\u2019s AI development boom. <\/p>\n
The e-commerce leader\u2019s shares climbed more than 7% in early Hong Kong trading, tracking an overnight gain in the US. That takes the Chinese company\u2019s gain to over 80% this year, a rally driven by aggressive moves to expand into the fledgling field of artificial intelligence. <\/p>\n
Alibaba this week raised $3.2 billion in convertible bonds to bankroll the country\u2019s biggest AI infrastructure budget and cloud service. It unveiled updates to flagship Qwen-series models designed to compete with DeepSeek and OpenAI. And The Information reported that Alibaba and Baidu Inc. are starting to employ in-house chips in the training of artificial intelligence, replacing costly Nvidia Corp. accelerators. Baidu\u2019s stock rose close to 13% in Hong Kong to its highest since October 2024. <\/p>\n
Alibaba is staging a comeback after years of regulatory scrutiny hammered its internet business. The firm co-founded by Jack Ma has established itself this year among the frontrunners of a nationwide AI frenzy. It\u2019s since declared itself wholly in pursuit of artificial general intelligence \u2014 the holy grail for many tech companies. <\/p>\n
Its recent moves coincide with growing optimism about the outlook for a technology expected to revolutionize industry and economies. This week, Oracle Corp. helped ignite a sectoral rally after delivering a blowout outlook for global AI spending. <\/p>\n
\u201cAlibaba\u2019s recent moves have shifted investors\u2019 focus completely to its AI potential, offsetting the concerns about its price wars in food delivery,\u201d said Paul Pong, a managing director at Pegasus Fund Managers. \u201cWith the capability of producing its own chips, it should create more growth drivers.\u201d <\/p>\n
The stock gains come even as Alibaba wages war with deep-pocketed rivals on another front.\u00a0 <\/p>\n
This week, the company declared it was sinking more money into incentives and subsidies to power its local services and e-commerce business. It\u2019s committing another 1 billion yuan ($140 million) of incentives to drive more traffic to one of its most popular online services, cranking up the heat on JD.com Inc. and Meituan in their ongoing battle for Chinese consumers. <\/p>\n
Some analysts regard that as a positive given it\u2019s competing hard for users to drive its core business. But others point to margin erosion at a time AI\u2019s monetization potential remains elusive. <\/p>\n
What Bloomberg Intelligence Says <\/p>\n
Alibaba\u2019s latest AI model releases, including the more efficient Qwen3-Next and 1-trillion-parameter Qwen-3-Max-Preview, should support demand for its cloud services. However, returns from the segment are set to remain poor, given low margins and disproportionately high capital costs. Quarterly adjusted Ebita in the cloud intelligence division rose by just $86 million in the 12 months ended June 2025. Tencent remains better placed to generate a near-term return on AI, in our opinion. <\/p>\n
– Robert Lea and Jasmine Lyu, analysts <\/p>\n
Click here for the research. <\/p>\n
(Updates with Baidu\u2019s stock from the third paragraph.) <\/p>\n