Alibaba shares surge 19% on strong cloud growth and AI chip development plans

Alibaba Cloud posted a 26% annual revenue rise with AI product sales growing at triple-digit rates for eight quarters, while reports of a new AI chip and e-commerce recovery, including instant commerce expansion, lifted investor sentiment

Alibaba’s Hong Kong-listed shares rose over 19% on Monday (September 1), reaching their highest level since March, after strong quarterly earnings highlighted growth in its cloud computing division and reports surfaced about the company’s new AI chip project. The surge extended gains from Friday, when Alibaba’s U.S.-listed stock closed nearly 13% higher following its earnings announcement.

For the June quarter, Alibaba reported revenue of 247.65 billion yuan ($34.73 billion), a 2% increase from a year earlier but slightly below analyst forecasts. Net income, however, jumped 78% year-on-year, surpassing expectations and providing reassurance to investors.

Cloud, AI and e-commerce momentum

The standout performer was Alibaba Cloud, which recorded a 26% annual revenue rise, accelerating from previous quarters. The company said revenue from AI-related products has grown at triple-digit rates for eight consecutive quarters, underlining its efforts to expand artificial intelligence services within its cloud platform. Reports that Alibaba is developing a new AI chip further lifted investor sentiment, drawing parallels with strategies adopted by global tech leaders such as Microsoft and Google.

Alibaba’s core e-commerce business also showed signs of recovery. The company has been investing heavily in “instant commerce,” a one-hour delivery service integrated into its Taobao platform. While this expansion into fast delivery has weighed on adjusted earnings for its e-commerce division, investors appear willing to accommodate near-term costs in expectation of long-term growth.

Balancing e-commerce and cloud

Alibaba’s share rally reflects renewed confidence in its ability to diversify beyond traditional e-commerce and strengthen its role in cloud computing and AI development. The company’s strategy indicates a balancing act: boosting profitability in its established businesses while channeling resources into emerging sectors shaping the future of global technology.