Alibaba shares surge to highest since 2021 on AI, cloud push as analysts flag strong growth

Alibaba shares rallied on Friday after the Chinese technology giant unveiled a series of initiatives to expand its artificial intelligence and cloud capabilities, reinforcing investor confidence in its long-term growth trajectory.

The company’s Hong Kong-listed stock rose 5.9% to HK$151.80, equivalent to US$19.49, by midday, placing it on track for its strongest close since November 2021.

In New York, its US-listed American depositary receipts gained 8% on Thursday.

The rally highlights renewed market enthusiasm for the e-commerce leader, which has pledged to prioritize AI and cloud computing as its twin growth engines.

Convertible bond offering to bolster cloud operations; analysts see further upside

Alibaba said on Thursday it plans to raise US$3.2 billion through the issuance of zero-coupon convertible bonds.

Around 80% of the proceeds will be allocated to cloud infrastructure, including expanding data centers, upgrading technology, and improving services to meet growing AI demand.

The remainder will fund international e-commerce initiatives.

Analysts at Jefferies said the move signals Alibaba’s confidence in its future, noting that its cloud revenue is poised to grow rapidly as enterprises accelerate adoption of AI tools.

"Alibaba's cloud service and one-stop consumption platform have further upside based on recent developments and industry trends," the analysts said in a research note.

"The Chinese tech giant could continue to unlock synergies between instant commerce and traditional e-commerce to improve user engagement, they added.

The firm expects Alibaba Cloud’s AI-related revenue to post triple-digit growth in the September quarter.

Jefferies maintained a buy rating on the stock and raised its target price for Alibaba’s ADRs to US$178 from US$165.

New products and services support growth narrative

The company has also introduced new consumer-focused features.

This week, Alibaba launched “Street Stars” within its Amap mapping app, providing recommendations for local businesses in a bid to strengthen user engagement and lifestyle services integration.

Meanwhile, its newly released AI model, Qwen3-Next, is optimized for long-text comprehension and offers significantly lower training costs, underscoring the company’s push to make AI tools more accessible to businesses.

Earlier, Alibaba reported that its cloud revenue grew 26% year-on-year in the April–June quarter, largely due to AI demand.

Chief Executive Eddie Wu has pledged at least US$53 billion of investment in AI and cloud services over the next three years.

Use of self-developed chips marks turning point

Investor sentiment was further buoyed by a report from The Information that Alibaba and Baidu have begun using their self-designed chips to train AI models, reducing reliance on Nvidia’s processors.

The shift comes as Washington’s export restrictions limit China’s access to advanced US-made chips, prompting Beijing to press its tech giants to develop domestic alternatives.

Although Nvidia’s hardware remains essential for the most advanced models, the reported use of homegrown chips highlights China’s growing efforts to strengthen self-sufficiency in critical technologies.

Baidu’s shares in Hong Kong also surged, climbing 8.5% on Friday.

Nomura analyst Jialong Shi noted that investor optimism around Chinese chip development likely contributed to the sharp share gains, even though details about the capabilities of the companies’ processors remain scarce