Alibaba Surges on Strong Earnings, AI Push

Alibaba (BABA), the Chinese tech giant, saw its US-listed stock surge nearly 13% on Thursday. This followed its announcement of quarterly earnings that exceeded Wall Street expectations and highlighted an aggressive push into artificial intelligence (AI).

Financial Performance

Alibaba reported adjusted earnings per share of RMB 20.39 ($2.79), compared to analysts' estimates of RMB 19.12 ($2.63). Quarterly revenue reached RMB 280.2 billion ($38.4 billion), against expectations of RMB 277.4 billion ($38.2 billion).

AI Focus

Alibaba's CFO, Toby Xu, emphasized the company's strong momentum in AI. He noted that AI-related product revenue had sustained triple-digit growth for six consecutive quarters. The tech giant is reportedly interested in investing directly in DeepSeek, a Chinese firm with a promising AI model. Alibaba is also partnering with Apple (AAPL) to integrate AI features into iPhones in China.

Strategic Investments

As part of its AI strategy, Alibaba announced plans to significantly increase capital expenditures on cloud and AI infrastructure over the next three years. CEO Eddie Wu stated that this investment would likely exceed the combined spending of the past decade.

Short-Term Impact

Alibaba's management acknowledged that the aggressive investment approach could have short-term consequences for profitability. However, they expressed confidence in the long-term demand for cloud and AI services.

Future Outlook

Alibaba expects revenue growth in its Cloud Intelligence Group to accelerate due to AI. The company believes that AI will drive significant demand for infrastructure, fueling its future business models.