About the Company

Alibaba Group was founded in 1999 by former teacher Jack Ma as an e-commerce startup. Initially focused on supporting small online businesses, it has since grown into a global conglomerate spanning various industries, including cloud computing, digital media, and financial services. Its flagship platform, Alibaba.com, is one of the world's largest B2B online marketplaces, connecting millions of buyers and suppliers across more than 190 countries and regions. Alibaba’s divisions include the retail group Taobao and Tmall, the delivery service Ele.me, the cloud segment under Alibaba Cloud, and well-known global online stores such as AliExpress and Trendyol.[1]

Billion-Dollar Investment

Alibaba is increasingly asserting itself in the AI sector, planning to invest ¥380 billion ($52.4 billion) over the next three years. As demand for AI-driven solutions surges, this investment is expected to enhance existing infrastructure and data centers to meet these needs immediately, according to The Tech Portal. This move reflects Alibaba's long-term focus on technological innovation and its ambition to dominate the AI-driven environment. CEO Eddie Wu has described AI as a "once-in-a-generation opportunity." The financial injection surpasses what the company has spent in this sector over the past decade, ranking it among the largest investments in the tech segment, according to Investing.com. Alibaba Cloud, already the company's fastest-growing division, has been further strengthened by AI products.[2] [3]

Stock Decline Following Growth

Despite the announcement of a massive investment, Alibaba’s stock did not react as expected. On February 24, 2024, shares fell by more than 10% on the New York Stock Exchange (NYSE), closing at $129.* The drop was largely driven by a new directive from U.S. President Donald Trump, which instructs the federal committee on foreign investments to restrict Chinese investments in key U.S. sectors, including technology. Additionally, foreign firms listed on U.S. stock exchanges will be subject to audits.[4] The Monday decline came shortly after Alibaba shares had rebounded to a three-year high on February 20, 2025, following the company’s earnings report.* As of February 25, 2025, the shares has partially cut its losses, rising 2.5% to $132.67.*

Alibaba's Stock Price Performance Over the Last 5 Years (Source: Investing.com)*

Strong Financial Results

Alibaba's strong momentum is also highlighted by its robust earnings report for the last quarter of 2024. A key driver was Alibaba Cloud, which saw a 13% year-over-year increase, reaching $31.7 billion. As mentioned, AI products have been a major growth driver, with revenue from these offerings surging for the sixth consecutive quarter, and the company expects continued growth. Alibaba has also been developing its AI model, Qwen, since 2023, with multiple updates along the way. Overall, Alibaba reported a net income of ¥49 billion ($6.72 billion), significantly exceeding market expectations. Revenue growth of 333% compared to the previous year underscores this success. Total revenue surpassed ¥280 billion, also beating forecasts. Other divisions also performed well. Taobao and Tmall Group saw a 9% year-over-year revenue increase, while International Digital Commerce, which includes Trendyol and AliExpress, grew by 32%.* [1] [2]

Collaboration Between Two Giants

Alibaba's partnership with Apple, announced on February 11, 2025, will bring AI-powered features to iPhones in China, benefiting both companies. After unsuccessful attempts with Baidu and evaluations of models from Tencent and ByteDance, Apple ultimately turned to Alibaba, leveraging its vast e-commerce and payment ecosystem to deliver tailored products for Chinese consumers. The joint product is currently undergoing mandatory approval from Chinese regulatory authorities. If approved, Alibaba would further strengthen its AI position, while Apple could regain market share lost to competitors like Huawei, especially since Apple Intelligence is not yet available in China.[3][4]

Conclusion

Alibaba is betting on AI not just as a technological trend but as a fundamental pillar of its future strategy. While its AI products are already yielding results, particularly in cloud computing, the true impact of this investment will unfold in the coming years. The partnership with Apple suggests Alibaba can find new opportunities even in a heavily regulated environment, but it also faces challenges due to U.S. restrictions. In the rapidly evolving tech sector, where innovation can lead to great success or unexpected setbacks, the question remains, whether Alibaba could adapt and maintain its edge.[1]

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

[1] https://www.alibabagroup.com/en-US/about-alibaba-businesses

[2] https://www.verdict.co.uk/alibaba-plans-to-invest-52-4bn-in-ai-over-three-years/?cf-view

[3] https://www.investing.com/news/stock-market-news/alibaba-to-invest-524-bln-in-cloud--ai-infrastructure-shares-hit-3yr-high-3885195

[4] https://finance.yahoo.com/news/alibaba-shares-tumble-trump-order-180807755.html

[5] https://data.alibabagroup.com/ecms-files/1532295521/de0aaac9-4fd5-4a17-8762-526616f36ca8/Alibaba%20Group%20Announces%20December%20Quarter%202024%20Results.pdf

[6] https://www.cnbc.com/2025/02/20/alibaba-baba-earnings-q3-2024.html

[7] https://www.theverge.com/news/611992/apple-intelligence-ai-china-alibaba-iphone

[8] https://www.investing.com/news/stock-market-news/apple-partnering-with-alibaba-to-develop-ai-features-for-iphones-in-china--report-3862135