Alibaba shares in Hong Kong have risen 34% this quarter ahead of the company’s June-quarter results due August 20, outperforming the Hang Seng Tech Index.

Investors are betting that the company’s spending on AI models, cloud services, and chips will strengthen its position in China’s AI market.

Analysts expect revenue to rise 8.4% from a year earlier, the fastest pace in almost three years, while profit may fall as Alibaba continues to invest heavily.

That trade-off has precedent. In the March quarter, Alibaba’s core profit plunged 84% amid heavy AI and cloud spending, yet the stock rose as investors viewed the margin pressure as part of an investment phase.

Alibaba Cloud said Qwen, its AI model family, was adopted by more than 90,000 enterprises in its first year.

US chip restrictions remain a risk. Alibaba scrapped its planned cloud spin-off in 2023 after saying export curbs on advanced AI chips could hurt the cloud unit’s competitiveness.

🔗 Source: Bloomberg

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