Alibaba shares soar 11% in Hong Kong after stellar earnings as China’s e-commerce sector recovers

Alibaba shares surged in Hong Kong Friday following stellar quarterly results, boosted by growth in the company’s cloud Intelligence and e-commerce segments.

The Chinese tech giant’s shares soared as much as as 11%, and were last trading 9.18% higher.

“We expect the outlook for BABA’s ecommerce business to remain strong in 1HCY25F, driven by the continued trade-in subsidies,” Nomura said in a note Friday.

In an attempt to stimulate consumption, last July China revealed plans to allocate 300 billion yuan ($41.5 billion) in ultra-long special government bonds to enhance its current trade-in and equipment upgrade policy.

Domestic e-commerce growth is recovering toward sustainable growth and profits, and the overall sentiment is boosting the broader China technology sector, Vey Sern Ling, senior equity advisor at UBP, said in an email to CNBC.

Chinese tech stocks have largely been on a tear since AI startup DeepSeek came into the fore, challenging the U.S.-led AI ecosystem with its R1 model amid claims of superior performance and substantially lower costs.

Jack Ma, the founder of Alibaba, who has remained largely out of the spotlight since 2020, participated in a rare private meeting hosted by Chinese President Xi Jinping on Monday. During the session, Xi encouraged private businesses to “display their abilities” and boost their confidence in a “new era” for their operations.

Alibaba became the target of an intense regulatory crackdown by Beijing, which began in 2020 when the company’s financial technology affiliate Ant Group was forced by regulators to cancel its initial public offering. 

Alibaba has been making “significant strides” in advancing its AI cloud business after launching its Qwen 2.5-Max flagship AI foundation model, Barclays wrote in a note, adding that the company saw a sharp increase in demand for AI inference, which accounts for up to 70% of their new demand.

“Great opportunities, however, often require significant investment,” Barclays said.

“The next three-year period will likely be the single period in which Alibaba makes the most concentrated investment in AI and Cloud infrastructure build-out,” Barclays’ analysts noted, adding that its planned investment is poised to be more than what the tech giant has spent over the last 10 years combined, which is almost 270 billion.

The company on Thursday reported a net income of 48.945 billion yuan ($6.72 billion) for the quarter ended Dec. 31, surpassing LSEG estimates of 40.6 billion yuan and more than three times higher than the 14.4 billion yuan in the same period last year.

Alibaba’s revenue of 280.15 billion yuan was also above analysts’ expectations of 279.34 billion yuan.

Shares of the company listed in the U.S. jumped more than 8% Thursday after the release of the results.

— CNBC’s Ruxandra Iordache, Evelyn Cheng and Anniek Bao contributed to this report.