Alibaba’s Hong Kong-listed shares surged 15 per cent to close at HK$138.50 on Friday, following an 8 per cent gain overnight in New York, as the company beat analysts’ consensus estimates with better-than-expected profit and revenue in the December quarter, as well as its major tech spending plan.
Its New York-listed shares gained another 4 per cent in pre-market trading on Friday. Alibaba owns the South China Morning Post.
Alibaba’s AI strategy is “a bit aggressive, but worthwhile” because it is imperative for the company to win in the AI era, said iiMedia Research founder and chief analyst Zhang Yi. “If Alibaba is not a [major] AI company in the future, it will not be favoured by investors in the capital market.”
That assessment lends a sense of urgency to the goal set by Alibaba chief executive Eddie Wu Yongming on Thursday, when he said the company’s next three-year capital outlay on AI and cloud computing infrastructure is expected to exceed what the group has spent over the past decade in building capabilities related to these technologies.
JPMorgan analysts, led by Alex Yao, wrote in a research note that Alibaba’s commitment shows its “strong confidence in [its] general AI monetisation outlook”. The accelerated growth at the firm’s Cloud Intelligence Group – with revenue up 13 per cent to 31.7 billion yuan (US$4.4 billion) in the December quarter from a year earlier – already showed investors the potential benefit of betting big on AI.
