Investors see a new leading role for Alibaba in the field of AI. Recently, the e-commerce and tech giant was in high demand in the stock market, increasing its enterprise value by nearly $87 billion.
Last month on the Hong Kong Stock Exchange, Alibaba’s share price rose as much as 46 percent since its lowest point this year on Jan. 13. As a result, its enterprise value increased by nearly $87 billion, Bloomberg writes.
Experts attribute this uptick to the growing interest in AI developments currently gaining traction in China, which is thus affecting Chinese tech stocks in general. Consider, among other things, the recent uproar surrounding the launch of DeepSeek models.
More specifically for Alibaba, investors are particularly interested in the company’s activities around developing its own AI services and its own AI platform. Multiple benchmarks, meanwhile, would show that Alibaba’s LLMs are already giving better results than those of OpenAI and Anthropic.
Alibaba rebounds
The rebound in the share price is doing a lot of good for Alibaba. In recent years, the tech giant was somewhat of a forgotten stock. This was due in part to pressure from the Chinese government on the company and other Chinese tech companies to comply with regulations. Also contributing to Alibaba’s poor numbers was disappointing consumer spending in China after the pandemic.
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Since last year, Supervisory Board Chairman Joe Tsai and CEO Eddie Wu, close associates of founder Jack Ma, have been trying to get the company back on track. In part by adjusting the cloud and e-commerce business. For example, by going back to the basic features of the business, focusing mainly on consolidating and streamlining core sales activities.
They are also investing heavily in the aforementioned AI developments, including startups such as Moonshot and Zhipu. They are also placing more priority on the existing cloud operations that form the basis for all AI developments. For example, the cost of these cloud services is being lowered to attract back old customers who have gone to seek refuge elsewhere.
Obstacles though
Experts say Alibaba still has hurdles to clear if it wants to return to its old self. Although it is betting heavily on AI, there are still question marks about how the uptake of these services and platforms will go especially whether Chinese end users will use these services more and are willing to pay for them compared to the current offerings.
Also, the cloud market of Chinese hyperscalers is not growing as fast as that of their U.S. competitors. Since cloud is a basic prerequisite for AI services and platforms, this obviously matters, experts tell Bloomberg.