The AI Catalyst Behind Alibaba’s Rise
Artificial intelligence is reshaping global technology markets, and few companies have ridden the wave as dramatically as Alibaba Group Holding Ltd. (BABA, 9988.HK). Once known primarily for its dominance in Chinese e-commerce, Alibaba is now reinventing itself as an AI and cloud powerhouse. In July 2025, the company’s Hong Kong-listed stock surged over 19% in a single session, adding more than $50 billion in market value.
This rally wasn’t fueled by hype alone—it was powered by triple-digit growth in AI-related product revenue and a 26% jump in its cloud division sales, proving that Alibaba’s pivot toward AI is delivering tangible results. While competitors like JD.com and Meituan continue to battle for razor-thin margins in traditional commerce, Alibaba has tapped into the most lucrative technological shift of the decade.
Alibaba’s AI Revenue Explosion
Alibaba reported triple-digit growth in revenue tied to artificial intelligence services, positioning itself as one of China’s leading AI developers. From chatbots and agent-based AI systems to open-source video generation models, the company has aggressively expanded its AI portfolio.
CEO Eddie Wu has repeatedly emphasized that artificial general intelligence (AGI) is now Alibaba’s long-term strategic goal. This declaration puts the company in direct competition not just with Chinese peers like Baidu and Tencent, but also with global AI leaders such as OpenAI, Microsoft, and Google.
Cloud Division Leads the Charge
Alibaba’s cloud business, the arm most closely tied to AI demand, saw a 26% year-over-year sales jump, surpassing analyst expectations. Cloud computing is not just a backbone for e-commerce anymore—it is the critical infrastructure powering large language models, data-heavy AI training, and enterprise adoption.
This strong performance has reassured investors that Alibaba is not just a retail giant but a full-stack technology company. With the cloud segment already contributing a growing share of revenue, many analysts see it as Alibaba’s ticket to long-term relevance in China’s rapidly evolving digital economy.
Competition Heats Up: JD.com & Meituan Struggle
While Alibaba enjoyed a record-breaking surge, rivals are facing turbulence:
- JD.com (JD, 9618.HK) saw its profits halved in the most recent quarter.
- Meituan (MPNGF, 3690.HK) warned of significant losses, triggering a $27 billion selloff across major Chinese e-commerce names last week.
The contrast is stark. Whereas JD and Meituan are stuck in margin-eroding price wars in online retail and food delivery, Alibaba’s pivot toward AI has helped shield it from the most brutal aspects of this competition.
Here’s a quick comparison snapshot:
| Company | Key Segment Focus | Recent Performance | Market Impact |
|---|---|---|---|
| Alibaba | AI & Cloud Growth | AI revenue +100%+, Cloud +26% | +$50B market value |
| JD.com | E-commerce | Profit halved | Shares down |
| Meituan | Food & Quick Commerce | Warning of losses | -$27B selloff |
Investor Sentiment: AI as a Market Divergence
Market strategists see Alibaba’s results as proof of a bifurcation in China’s tech sector. According to Charu Chanana of Saxo Markets, AI is delivering scalable growth, while consumer-facing commerce businesses remain locked in destructive price competition.
This divergence explains why Alibaba’s stock has outpaced peers in 2025. With AI services, cloud revenue, and its international platforms like Lazada and AliExpress performing well, Alibaba has become the preferred Chinese tech play for investors looking for growth beyond retail.
Risks Ahead: Can Alibaba Maintain the Momentum?
Despite the optimism, risks remain. The Chinese AI race is heating up, with Baidu, Tencent, and new players like DeepSeek aggressively releasing AI models. Global competition, geopolitical tensions, and the capital-intensive nature of AI research could challenge Alibaba’s profitability.
Moreover, Alibaba is still investing heavily in quick commerce (food delivery and instant shopping) to defend market share. While commerce chief Jiang Fan claims that these investments have boosted user growth on Taobao by 20%, analysts worry about the margin pressures this strategy could create.
A Global Perspective: China Tech’s Silent Comeback
Alibaba’s breakout is also seen as part of a larger Asian tech resurgence. While global markets remain preoccupied with geopolitics, tariffs, and valuations, Chinese firms like Alibaba are proving that real AI revenue growth can still drive massive rallies.
Unlike Western AI plays that often trade on hype, Alibaba’s gains are backed by measurable cloud and AI adoption, giving it stronger fundamentals.
Looking Ahead: The Future of Alibaba and AI in China
Alibaba’s $50 billion rally underscores one clear fact: AI is no longer just an add-on—it is the company’s growth engine. With its strong foothold in cloud computing, international commerce, and advanced AI research, Alibaba is positioning itself as both a China tech leader and a global AI competitor.
For investors, this surge may only be the beginning. If Alibaba continues to scale AI adoption across its ecosystem, it could evolve from being seen as a retail giant into China’s premier AI-driven tech conglomerate.
In the near future, the biggest question is not whether Alibaba can maintain its momentum—it’s whether its rivals can catch up.
Reference : Jeanny Yu and Claire Che