Alibaba Group (NYSE: BABA) saw its stock surge 14% on Thursday after the Chinese e-commerce giant delivered better-than-expected quarterly earnings, driven by the rapid expansion of its AI and cloud businesses. The company’s American depositary receipts (ADRs) jumped to $143.30 in early trading, significantly outperforming the broader market, with the S&P 500 down 0.4%.
Alibaba’s Earnings Beat Expectations
For the quarter ending December 31, Alibaba reported an adjusted net profit of 51.07 billion yuan ($7.01 billion), reflecting a 6% year-over-year increase. Revenue rose to 280.15 billion yuan, surpassing analysts’ expectations of 279.34 billion yuan. Profit estimates were also exceeded, with analysts forecasting 49.94 billion yuan ($6.86 billion) in earnings, according to FactSet data.
AI and Cloud Fuel Growth
One of the key drivers of Alibaba’s strong performance was the impressive growth of its cloud-intelligence segment. Revenue from the division increased 13% year-over-year to 31.74 billion yuan. Notably, revenue from AI-related products soared by triple digits for the sixth consecutive quarter, highlighting the impact of Alibaba’s aggressive investments in artificial intelligence.
Alibaba’s AI initiatives gained further momentum after the company secured a crucial partnership with Apple to support AI services for iPhones sold in China. This strategic deal saw Alibaba outmaneuver key competitors like Baidu and ByteDance, solidifying its position as a leader in China’s AI infrastructure.
E-Commerce Holds Strong Amid Competition
Despite concerns over China’s economic slowdown and intensifying competition from rivals such as PDD Holdings (owner of Pinduoduo and Temu), Alibaba’s core e-commerce business remained resilient. The company’s ability to navigate market headwinds and maintain strong consumer engagement contributed to the earnings beat, easing investor concerns about demand fluctuations.
Alibaba Stock Rallying in 2025
Alibaba’s recent rally extends a broader upward trend in 2025. Prior to Thursday’s earnings boost, BABA ADRs had already surged 48% year-to-date, significantly outperforming the S&P 500’s 4.5% gain. Investor enthusiasm has been fueled by optimism surrounding DeepSeek’s AI advancements and Alibaba’s deepening integration of AI-driven solutions.
With robust AI adoption, cloud expansion, and resilient e-commerce performance, Alibaba is reinforcing its standing in China’s competitive tech landscape. Investors are taking notice, and the company’s stock continues to attract bullish sentiment amid the ongoing AI revolution.
