Stock Soars on AI & Cloud Growth – Why a Post-Earnings Pullback Could Be Interesting | investingLive

Q: What did Alibaba report in its latest earnings, and how did the market react?

A: In its most recent quarterly report, Alibaba’s revenue rose modestly, but its cloud business jumped 26% year over year, far outpacing expectations. That growth was fueled by strong demand for artificial intelligence services. Investors cheered: Alibaba’s Hong Kong-listed shares surged 19% to a three-year high, while the U.S.-listed ADRs gained nearly 13% in a single session. According to Reuters, the rally came even though Alibaba’s overall revenue missed forecasts slightly, showing how much weight the market now places on its cloud and AI momentum.

Q: Why was Alibaba’s cloud and AI business such a big deal this quarter?

A: Alibaba Cloud is becoming a new growth engine. Management highlighted that AI-related services delivered triple-digit percentage growth. The company invested heavily in infrastructure, and those efforts are paying off with accelerating cloud demand from enterprises. For investors, this shows Alibaba is no longer just an e-commerce company but a broader tech leader.

Q: How is Alibaba investing in AI and cloud services within China?

A: Alibaba has plowed more than ¥100 billion into AI infrastructure in the past year. It is integrating AI into nearly all its platforms, from e-commerce recommendations to business chat tools. The strategy is clear: anchor future growth on AI and cloud, supported by its huge consumer ecosystem.

Q: Does Alibaba have its own AI products?

A: Yes. Its large language model, Tongyi Qianwen, is already in use across apps like Taobao and DingTalk. These tools help consumers shop smarter and businesses operate more efficiently. Alibaba is building a Chinese alternative to tools like ChatGPT, but focused on domestic needs and regulations.

Q: How does Alibaba compare to Amazon and Microsoft in cloud growth?

A: Alibaba’s cloud business grew 26% year-on-year, in line with Microsoft’s cloud growth and faster than Amazon Web Services at about 17%. But in absolute numbers, Alibaba Cloud is still much smaller. Its quarterly revenue is about $4.7 billion compared with over $30 billion at AWS. Alibaba dominates China’s cloud market, while Amazon and Microsoft lead globally.

Q: What guidance did Alibaba give?

A: While not providing formal targets, management stressed that AI and cloud will drive “robust growth” in the years ahead. That reassurance matters because Alibaba’s core e-commerce is maturing. The company wants investors to focus on its newer growth pillars.

Q: How is its e-commerce business holding up?

A: Domestic commerce grew about 10% year-on-year, but competition from JD.com, Pinduoduo, and Douyin is intense. Alibaba is spending heavily on quick commerce (like one-hour delivery), which pressures margins in the short term but builds long-term customer loyalty.

Q: How do U.S.-China tensions affect Alibaba?

A: Export restrictions on advanced chips directly hit Alibaba’s cloud strategy. In fact, Alibaba canceled a planned spin-off of its cloud business, citing U.S. restrictions. Geopolitical risks remain an overhang, even though Alibaba’s consumer base is mostly domestic. CNN has reported how Washington’s limits on advanced chip exports are shaping strategies for Chinese tech giants like Alibaba.

Q: What about Chinese regulation at home?

A: The harsh crackdown that started in 2020 appears to have eased. Alibaba still faces oversight, but Beijing has pivoted to encouraging growth. Regulators now see big tech as essential for boosting China’s economy, though new rules around data and AI keep the guardrails in place.

Q: Is Alibaba showing resilience?

A: Yes, despite regulatory storms and fierce competition, Alibaba has stabilized, stayed profitable, and found new growth paths. The stock has bounced significantly in 2025. Still, external risks mean investors need to stay cautious.

Q: Why does all this matter for long-term investors?

A: Alibaba is transforming into more than an e-commerce company. It’s becoming a pillar of China’s push into cloud and AI. For long-term investors, this means potential exposure to the next decade’s growth themes – but also exposure to geopolitical and regulatory uncertainty. The payoff could be significant, but so could the risks.

BABA Stock Technical Analysis and Trade Idea

From a technical perspective, Alibaba shares are trading inside a rising channel, with two clear touchpoints on both the upper and lower bands. The stock gapped nearly 13% higher on earnings, finishing close to its session high – a bullish sign of conviction.

A possible trade setup is looking for a retracement entry around $131.86, slightly below the current price. The idea is that after such a sharp post-earnings jump, some pullback is natural before the stock resumes higher.

• Entry: around $131.86 (orientation, not guaranteed)

• Stop-loss: $120.70 (about -8.5% risk), below the August 28 high before the earnings gap-up

• Profit Targets:

This setup offers a reward-to-risk ratio of about 3.5, risking 8.5% to aim for nearly 30%. It’s a patient trade, banking on Alibaba continuing its drift upward within the channel. With China’s broader tech sector showing resilience and Alibaba’s fundamentals improving, the technicals align with the fundamental story.

That said, timing an entry perfectly is difficult. Traders and investors should use their own time frames and indicators to fine-tune, and always trade at their own risk. Long-term investors can see this as part of a gradual move higher, remembering that Alibaba’s all-time high was above $300, leaving plenty of room for recovery if momentum holds.

This is an opinion and not financial advice. You must do your own research on Alibaba and BABA stock, and always invest and trade at your own risk only. Visit investingLive.com for additional perspectives.