Alibaba's Hong Kong shares rocketed nearly 19% Monday as the Chinese tech giant's cloud computing division accelerated to 26% growth, driven by surging AI demand. Despite missing revenue estimates, investors cheered the company's triple-digit AI product growth for the eighth straight quarter and billion-dollar instant commerce push.
Alibaba Group Holdings just delivered the kind of earnings surprise that sends markets into overdrive. The Chinese e-commerce giant's Hong Kong shares exploded 18.84% higher Monday after the company posted a stunning 78% jump in net income, even as revenue fell short of Wall Street expectations.
The real story isn't in the headline numbers — it's in what's driving them. Alibaba's cloud computing division, once a sleepy infrastructure play, has transformed into an AI powerhouse that's now accelerating faster than Microsoft or Google's cloud businesses in some quarters.
Revenue at the cloud unit hit 33.4 billion yuan ($4.7 billion), surging 26% year-over-year and marking a significant acceleration from the 18% growth seen last quarter. "Driven by robust AI demand, Cloud Intelligence Group experienced accelerated revenue growth, and AI-related product revenue is now a significant portion of revenue from external customers," CEO Eddie Wu said in earnings materials.
That AI momentum isn't slowing down. Alibaba revealed its AI-related product revenue has maintained triple-digit year-over-year growth for the eighth consecutive quarter — a streak that puts it in rarified company among global cloud providers. The numbers are so strong that adjusted EBITA in the cloud division jumped 26% year-over-year, showing the unit isn't just growing but doing so profitably.
The timing couldn't be better. While competitors scramble to monetize their AI investments, Alibaba has quietly built a formidable position through its open-source strategy. The company has aggressively launched various AI models that developers can use for free, then monetizes through premium cloud services — a playbook that's clearly paying off.
Friday brought another catalyst when CNBC reported that Alibaba is developing a new AI chip, first reported by the Wall Street Journal. The news helped drive Friday's stock surge and signals the company's determination to control its AI destiny rather than rely entirely on processors.
