China’s e-commerce leader posted a triple-digit percentage gain in AI-related product revenue as well as a better-than-anticipated 26% jump in sales from the cloud division—the business most closely tied to the artificial intelligence boom.

That helped assuage investors nervous about the fallout from a worsening battle with Meituan and JD.com Inc. in internet commerce. Alibaba’s shares gained their most intraday since November 2022 in Hong Kong, boosting the company’s market value by more than $50 billion. Turnover in the stock marked a record high as of early afternoon. The rally helped energize the broader AI sphere: Ernie-developer Baidu Inc. gained as much as 5.8%, while Tencent Holdings Ltd. also climbed.

“Alibaba’s earnings underscore a bifurcation within China tech: AI is delivering scalable growth, while traditional consumer-facing segments remain mired in destructive price competition,” said Charu Chanana, chief investment strategist at Saxo Markets. 

“The triple-digit surge in AI revenue and robust cloud sales show Alibaba is repositioning for longer-term relevance in the tech stack, not just retail dominance,” she added.

Alibaba’s progress in AI—where it is considered among the front-runners in Chinese artificial intelligence development—helped gloss over concerns about the three-way battle gripping online commerce. 

That dealt more damage than anticipated to some of the country’s e-commerce leaders: JD’s profit halved in the quarter while Meituan warned of major losses, triggering a $27 billion selloff of the three companies’ shares last week. 

The AI element helps explain why Alibaba’s stock has easily outpaced its more commerce-reliant rivals this year. Alibaba has also leveraged the growth of an international arm that encompasses some of the world’s most-recognized online shopping platforms from Lazada to AliExpress.

It has “China’s best AI enabler thesis,” Morgan Stanley analysts including Gary Yu wrote in a research note. That’s as losses from meal delivery and instant commerce peak this quarter, they said.

Investors are now focused on whether Alibaba will pursue that margin-eroding competition, at a time it’s declared record amounts of spending toward developing AI services and computing. 

On Friday, commerce chief Jiang Fan argued that investments in quick commerce—food delivery and instant shopping—had already driven 20% growth in users on its main Taobao marketplace. The fledgling division has in four months grown to the point that it can begin to achieve economies of scale, he added.

Alibaba is simultaneously making substantial investments in the AI field, developing large language models to avoid falling behind in a critical technological race. 

The company views AI as essential to its future, whether in terms of providing cloud computing, powering its core business or coming up with services to challenge OpenAI and DeepSeek. CEO Eddie Wu went as far as saying in February that artificial general intelligence, or AGI, is now the company’s primary objective.

Just last week, Alibaba updated its own open-source video generating model, part of a string of recent upgrades that span the gamut from agentic AI services to chatbots.

It remains to be seen if Alibaba can turn AI into a money-spinner in an increasingly competitive field. From Baidu to Tencent, Chinese firms are enhancing and releasing AI models at a frenetic pace, increasing the pressure on Alibaba to deliver breakthroughs.

“Alibaba’s breakout reinforces a broader theme in Asia: while global tech remains preoccupied with geopolitics and valuations, parts of China tech are quietly reaccelerating—driven not by hype, but by real revenue growth in AI and cloud,” Chanana said. “This isn’t a broad-based rotation yet—but the divergence is real.”

“Alibaba’s breakout reinforces a broader theme in Asia: while global tech remains preoccupied with geopolitics and valuations, parts of China tech are quietly reaccelerating—driven not by hype, but by real revenue growth in AI and cloud,” Chanana said. “This isn’t a broad-based rotation yet—but the divergence is real.”