Alibaba Shares Surge On AI Plans

Alibaba Group Holding saw its shares surge 15 percent in Hong Kong trading on Friday on optimism around its plans for increased spending on artificial intelligence, amid a continued rally for Chinese tech stocks spurred by the sudden popularity of AI start-up DeepSeek in late January.

Alibaba’s shares also gained in New York trading on Thursday and Friday after the company announced better-than-expected revenue and profit for the December quarter.

The company’s chief executive Eddie Wu said on Thursday that Alibaba’s capital expenditures for AI and cloud computing infrastructure over the next three years would surpass comparable spending over the past decade.

Cloud investments

At the same time, Alibaba said revenue at its Cloud Intelligence Group was up 13 percent year-on-year to 31.7 billion yuan ($4.4bn, £3.5bn) for the December quarter, showing the potential gains from large AI infrastructure investments.

Western companies have also been announcing major AI data centre plans, including the $500bn Stargate project, backed by Oracle, SoftBank and OpenAI.

Hong Kong’s Hang Seng Index ended last week up 3.8 percent, extending a six-week run that is the longest since January 2023.

Investors have shown increased interest in Chinese tech stocks in recent weeks after DeepSeek, which like Alibaba is based in Hangzhou, rose to worldwide popularity with open source AI models that perform on par with Western competitors, but which it said were developed at a fraction of the cost.

The sudden fame of DeepSeek prompted investors to rethink assumptions about US dominance of the AI industry and shaved $1tn from world markets in a single day.

Alibaba has seen $110bn added to its market capitalisation during the rally, with a reported deal with Apple adding to its AI credentials.

‘AI will change everything’

Earlier this month reports said Apple was forming a deal with Alibaba to offer its AI tools on devices sold in China.

Wu said the company would soon release a deep-reasoning model based on its open source Qwen 2.5-Max model, competing with DeepSeek’s R1.

Earlier this month AI community Hugging Face said Alibaba’s Qwen family of open source models were used to train the world’s top 10 open source large language models (LLMs).

Alibaba co-founder Jack Ma, who has recently returned to prominence after years of keeping a low profile, said in a speech in December that “AI will change everything”.

“From today’s perspective, the changes that artificial intelligence will bring in the next 20 years will be beyond everyone’s imagination, as AI will bring a greater era,” he said.