HONG KONG – Something exciting is happening in China's tech world! Alibaba Group Holding is becoming popular with investors again, thanks to artificial intelligence (AI). This is great news for the e-commerce giant, which had been struggling after facing strict rules from the government for several years.
The Alibaba stock listed in Hong Kong has grown by 46% since reaching its lowest point on January 13, 2025. This growth has added about US$87 billion (S$118 billion) to the company's value, doing much better than the Hang Seng Tech Index, which grew by 25% in the same time.
This makes Alibaba the best-performing big tech company in China this year, doing better than other famous companies like Tencent Holdings, Baidu, and JD.com.
This is a surprising change for Alibaba. Before this, investors weren't very interested in the company because China's strict rules on tech companies and slow shopping after Covid-19 had hurt its business. But now, people are excited about Alibaba's work on AI services. This excitement grew even more after a Chinese AI company called DeepSeek showed new technology that worried many US companies.
Alibaba's shares got even more popular on February 12, when The Information reported that Apple wants to work with Alibaba to create AI features in China.
Joe Tsai, Alibaba's chairman, said this news was true while speaking at the World Governments Summit in Dubai on February 13.
"DeepSeek's new AI technology has made Chinese tech companies very interesting to investors," said Andy Wong, who works at Solomons Group as an investment and ESG director for Asia-Pacific. "We think Alibaba has the best chance to grow and make more money in the next few years."
Alibaba's success in 2025 comes after a year of positive changes led by two of Jack Ma's trusted friends: Joe Tsai and Eddie Wu.
These two leaders, who helped create Taobao in Jack Ma's apartment near a lake, took control in 2023. This was after the Chinese government's investigations and Covid-19 problems had seriously affected Alibaba's cloud and shopping businesses.
They started by making Alibaba's main shopping business better and more organized.
They also decided to focus on AI. Since ChatGPT became famous, Alibaba has invested money in promising Chinese AI companies like Moonshot and Zhipu. They also worked on growing their cloud business, which is important for AI development, by reducing prices to attract customers who had switched to other companies during the difficult times. The company also started working on AI technology, joining other companies like Baidu who were already doing this.
In January, their hard work showed good results. Alibaba shared test results showing that their Qwen 2.5 Max AI system performed better than similar systems made by Meta Platforms (Llama) and DeepSeek (V3) in many different tests.
Now, Alibaba is seen as one of the top companies in AI, alongside big names like Tencent, ByteDance, and newer companies like Minimax and Zhipu.
However, it's still just the beginning.
One big challenge for Chinese AI companies is that people and businesses in China are not using AI services as much as expected, and they don't want to pay much for these services.
Also, the cloud business in China isn't growing as fast as in America. Experts say that in the last three months of 2024, Alibaba's cloud business grew by 9.7% and Baidu's by 7.7%, while Amazon.com grew by 19% and Microsoft by 31%.
When Alibaba shares its financial results on February 20, investors will get to learn more about how well their AI systems are doing and what they expect from their cloud services.
Even though there are still some questions, many investors think the Alibaba stock is a good deal, even after its recent price increase. The company's shares are selling at 12.2 times expected earnings, which is less than its usual five-year average of 14.6 times.
"Even after the recent price increase, Alibaba's stock is still cheaper than similar US tech companies, considering how much it could grow," said Mr. Manish Bhargava, who leads Straits Investment Management in Singapore.
"The company is growing in other countries, which could help it depend less on China and grow more in the future." BLOOMBERG.
-----
TAGS: #AlibabaAI #ChinaTech #AIInnovation #AICompetition #AIAdoption #CloudComputing #TechStocks
Source: straitstimes.com / 13-Feb-2025 / https://www.straitstimes.com/business/companies-markets/alibaba-becomes-chinas-new-ai-darling-with-118-billion-rally
0 Comments