Alibaba is effectively generally known as one of many key e-commerce gamers within the essential Chinese language market — however over the previous couple of years, the enterprise has diversified considerably, and is now rightfully thought of a veritable tech big.
For the reason that begin of the yr, Alibaba inventory (NYSE: BABA) has been on fairly a powerful upward trajectory.
The corporate’s Q2 earnings call on November 15 was strong — with a small earnings beat and revenues lacking estimates simply barely. Within the rapid aftermath, the inventory entered a consolidation interval — and in January, the in a single day success of DeepSeek spurred on a flurry of optimism concerning the Chinese language tech sector.
On February 19, BABA inventory closed at $124.80, however by press time on February 20, the value of Alibaba shares had elevated to $139.48, bringing year-to-date (YTD) returns as much as 64.50%.
This newest 11.75% transfer to the upside was brought on by the discharge of the corporate’s quarterly report covering Q3 — and as soon as extra, AI is the dominant narrative.
Alibaba inventory rises on earnings beat, strategic AI strikes
Earnings per share got here in at $2.93, forward of consensus estimates which have been pegged at $2.67. Revenues got here in simply barely above estimates.
As bullish as an earnings beat is, it was not these two metrics that drove the rally. It was optimism surrounding synthetic intelligence. AI-related product income achieved triple-digit development for the sixth consecutive quarter, whereas cloud income elevated by 13% on a year-over-year (YoY) foundation. Though much less quantifiable, the discharge of Alibaba’s Qwen 2.5 AI mannequin was additionally a bullish catalyst.
Talking to analysts, Chief govt officer (CEO) Eddie Wu claimed that the corporate would make investments extra in AI and cloud computing over the subsequent three years than it had within the entirety of the earlier decade — though he didn’t specify the precise quantity.
The e-commerce enterprise lately introduced a partnership with Apple, which can see Alibaba’s AI options integrated into iPhones sold in China. As well as, Alibaba is reportedly considering an investment into DeepSeek, which has lately sought out outdoors funding for the primary time.
One other key issue that readers shouldn’t neglect is the present Alibaba inventory repurchase program. This quarter, the enterprise repurchased roughly $1.3 billion price of BABA inventory — and it has board authorization to repurchase as a lot as $20.7 billion extra by March 2027.
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