By Kimberley Kao
Alibaba Group's shares surged in Hong Kong on optimism about its cloud business amid strong AI demand and improvements in its e-commerce.
Shares rose as much as 19% to 137.50 Hong Kong dollars, equivalent to US$17.64, early Monday, putting it on track for their biggest one-day gain in more than three years. The stock was the top gainer on the benchmark Hang Seng Index, which was recently up 2.2%.
The rally followed a 13% jump in its ADRs on Friday after earnings. Alibaba posted a 78% rise in net profit for the three months ended June from a year earlier.
Alibaba said cloud revenue grew 26% in the April-June quarter on surging demand for AI services. Chief Executive Eddie Wu has called "AI plus cloud" one of Alibaba's two growth engines, alongside e-commerce.
The results prompted several analysts to raise target prices, citing accelerating cloud revenue driven by AI monetization and improvements in its quick commerce.
Alibaba's rapid-delivery feature on its shopping platform is its latest bid to take share in China's on-demand delivery market from rivals such as JD.com and Meituan; so-called quick commerce typically delivers in under an hour.
The pace of profitability improvement in quick commerce appears faster than expected, Daiwa Capital Markets analysts John Choi and Robin Leung wrote, adding that cloud revenue growth should accelerate in coming quarters as AI workloads rise. They lifted their target price to HK$180 from HK$170.
Alibaba has achieved its "first-stage goal for quick commerce, which is to scale up user growth and build consumer mind share," Jefferies analysts said.
This brings "much-needed growth," but will cause temporary margin pressure, Nomura analysts Jialong Shi and Rachel Guo said. "In the long run, we think Alibaba's strength lies in the retail-related quick commerce service," they said.
Nomura raised its target price for Alibaba's ADRs to US$170 from US$152 on a stronger outlook for the e-commerce and cloud.
Quick commerce losses will likely peak in the September quarter, while growing AI demand continues to drive cloud momentum, they added.
Alibaba's Hong Kong shares are up 66% so far this year.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
September 01, 2025 00:03 ET (04:03 GMT)
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