Alibaba’s AI-fuelled earnings sent shares up 19%, adding $50bn and boosting Baidu and Tencent

Alibaba has delivered a dramatic boost to Chinese technology stocks after unveiling earnings that surpassed expectations, sending its market value soaring by more than $50 billion in a single session.

The e-commerce and cloud giant’s stock surged nearly 19% following its Q1 FY26 results, marking its biggest one-day rally since November 2022. The move, which ignited heavy trading volumes in Hong Kong, has reinvigorated investor confidence in China’s technology sector, particularly in artificial intelligence and cloud computing.

Alibaba reported triple-digit growth in AI-related product revenue and a 26% increase in cloud sales. These strong numbers helped offset lingering concerns about slowing e-commerce growth and fierce competition in food delivery, which had weighed on the company’s outlook earlier this year.

The performance underscored Alibaba’s transformation from a retail-focused platform into a central player in China’s AI and cloud race. Analysts say the company is positioning itself as a key enabler of artificial intelligence adoption, not only through its cloud services but also by embedding AI capabilities across its product lines.

Baidu and Tencent, two of China’s other technology powerhouses, also benefited from the renewed optimism. Baidu climbed nearly 5% on the day, while Tencent added just under 1%, extending gains as investors returned to Chinese AI names that had struggled under regulatory scrutiny and weaker consumer spending.

Morgan Stanley described Alibaba as “China’s best AI enabler thesis,” pointing to its expanding AI capabilities and robust cloud business. The firm added that Alibaba’s strong position in enterprise services could make it a long-term winner as AI adoption accelerates across industries.

Still, challenges remain. Alibaba’s foray into quick commerce and food delivery has squeezed margins, and analysts caution that sustaining AI-driven growth will depend on the company’s ability to turn heavy investments into consistent profits. The coming quarters will test whether AI demand remains as strong as current numbers suggest.

For now, however, the company’s momentum is undeniable. The stock’s near-19% rise has restored confidence in the broader Chinese tech market, which has endured years of volatility due to regulatory pressures and concerns about slowing economic growth.

Investor sentiment, battered by a series of crackdowns and trade tensions, appears to be shifting back in favour of Chinese technology giants as they demonstrate resilience through innovation. Alibaba’s rally could signal the start of a more sustained recovery for the sector, particularly if earnings from peers confirm similar trends.

Market data shows the enthusiasm is not limited to short-term speculation. Turnover in Alibaba shares hit record highs in Hong Kong, reflecting strong institutional interest. Analysts say the appetite reflects growing conviction that China’s tech firms can carve out new growth paths through AI, even as traditional retail sectors plateau.

On Wall Street, the outlook for Alibaba remains upbeat. According to TipRanks, the stock holds a Strong Buy consensus rating, with 12 analysts recommending Buy and just one advising Hold. The average price target of $152.63 implies a further 13% upside from current levels.

Whether that optimism proves justified will depend on how well Alibaba converts AI advances into long-term profitability. But for now, its resurgent performance has reignited hopes that Chinese technology stocks can reclaim their role as global growth engines