ALIBABA Group Holding posted its fastest pace of revenue growth in more than a year, reflecting a turnaround in its commerce business and big strides into the critical field of AI.
It reported an 8 per cent rise in sales to 280.2 billion yuan (S$51.7 billion) in the December quarter, versus an average projection for 277.4 billion yuan. Net income rose to 48.9 billion yuan. Its US shares climbed.
Alibaba is staging a comeback after a brutal government clampdown gutted its Internet business, once by far China’s dominant online commerce platform. The business began to turn around in 2024 after Joe Tsai and Eddie Wu – two of co-founder Jack Ma’s most trusted lieutenants – retook the helm and focused investment on AI and e-commerce.
Alibaba has gained some US$100 billion of market value in 2025, though it’s still worth a fraction of its pre-crackdown peak. Ma himself joined a select group of the biggest names in Chinese technology and business at a televised summit convened this week by Xi Jinping – signifying Alibaba’s return to favour after years in the cold. The gathering featured entrepreneurs across a broad swath of industry, notably from the sphere of artificial intelligence.
Ma was the highest-profile casualty of Xi’s crackdown on the Internet and private sector in 2020, when authorities scuttled the blockbuster initial public offering of Alibaba-affiliate Ant Group.
That episode kicked off a yearslong campaign to tighten state control over the economy, rein in the nation’s billionaire class and shift resources towards Xi’s priorities including national security and technological self-sufficiency. Once one of China’s most outspoken entrepreneurs, Ma largely disappeared from public view.
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But authorities have taken a less combative approach as China’s economy slowed and companies aligned themselves with Xi’s push for leadership in areas like AI. Alibaba, which operates one of the world’s biggest cloud services platforms, wowed investors this year by making major headway in that arena during the post-ChatGPT era.
Since the advent of OpenAI’s chatbot, Alibaba has invested in a clutch of China’s most promising startups, including Moonshot and Zhipu. It prioritised the expansion of the cloud business that underpins AI development, slashing prices to win back the customers that fled during the turbulent years. It also decided to spend big on AI, joining a race led by Baidu at the time.
Its Qwen AI model has performed well in official benchmark tests and signalled the company’s growing relevance in the field. And Apple is incorporating Alibaba’s AI technology into Chinese iPhones, a vote of confidence in its prowess.
“The primary cause might have been lower earnings at Taobao-Tmall, which increased merchant and user perks to bolster e-commerce market share in China. That headwind would weaken if mainland consumer sentiment improves in the next 12 months. Adjustments to international digital commerce unit AIDC and the operations of logistics business Cainiao amid the US-China trade war could hurt earnings, particularly in the first half of this year,” said Catherine Lim and Trini Tan, analysts for Bloomberg Intelligence. “Alibaba’s push for greater use of its public cloud services and AI-related products, at reduced prices, is meant to bolster revenue growth, but the subsidies must have undermined margin gains from economies of scale.”
Tsai and Wu also accelerated the unloading of non-core assets such as in physical retail, raising capital to bankroll AI investments as well and an international expansion spearheaded by newly appointed e-commerce chief Jiang Fan. He now heads up Alibaba’s effort to fend off up-and-coming rivals including ByteDance and PDD Holdings Inc.
DeepSeek’s sudden rise to global prominence last month – a shock to both Silicon Valley and Wall Street – has boosted Chinese tech stocks including Alibaba in recent weeks. The stock is trading at over 13 times estimated forward earnings, up from less than nine just last month.
Alibaba’s valuation could return to its five-year average of 15 times if it continue to show progress, said Xiadong Bao, fund manager at Edmond de Rothschild Asset Management. BLOOMBERG
