Alibaba Group Holding Ltd. NYSE:BABA, China's e-commerce pioneer and a major cloud computing provider, saw its Hong Kong-listed shares surge 12%, marking their strongest move since September, as investors grew more optimistic ahead of earnings and shifted capital into large Chinese internet names that had lagged the market. The rally also lifted sentiment across the sector, with the Hang Seng Tech Index rising 5%, while Tencent Holdings Ltd. (TCEHY), one of China's major internet companies, and JD.com Inc. NASDAQ:JD, Alibaba's e-commerce rival, advanced nearly 4% each.
Market watchers pointed to reports from Jiemian, a local media outlet, that Alibaba told analysts its instant-commerce losses narrowed in the June quarter while overall profitability remained steady. That update appeared important because Alibaba's costly battle with JD.com and Meituan, a food delivery and local services platform, over food delivery orders had weighed on profits, drawn attention from Beijing authorities, and overshadowed progress in Alibaba's cloud and AI operations.
UBS Group AG analysts led by Kenneth Fong said management has shifted toward protecting margins rather than chasing topline growth, suggesting investors may begin refocusing on Alibaba's valuable AI assets and growth angle. Alibaba has consolidated its AI services under the Qwen brand, while AI-related revenue has grown by a triple-digit percentage for several quarters, and Jefferies Hong Kong Ltd. analyst Thomas Chong said AliCloud could accelerate year over year and perform better than expected on AI demand, adding to a broader Asia AI rotation into Chinese megacaps after strong gains in South Korean and Taiwanese chipmakers.