Alibaba Group Holding Ltd’s stock experienced an almost 15% increase, marking its highest intraday gain since February in Hong Kong.

This surge in Alibaba’s stock was driven by the company’s strong performance in the artificial intelligence (AI) sector, highlighting steady progress against rivals in a post-DeepSeek Chinese development frenzy.

The company reported a triple-digit percentage gain in AI-related product revenue on Friday. Furthermore, its cloud division, the business most closely tied to the AI boom, saw a better-than-anticipated 26% jump in sales, Bloomberg reported.

AI progress offsets e-commerce competition

The Chinese e-commerce leader’s growth in AI helped alleviate investor concerns after it reported a disappointing 2% rise in revenue and a surprise decline in operating income.

Alibaba’s progress in AI, considered among the frontrunners in Chinese artificial intelligence development, also helped to ease concerns about an intense price war with JD and Meituan in the giant food delivery sector.

This competition had a notable impact on the market, with JD’s profit halving in the quarter and Meituan warning of major losses. Last week, a sell-off of the three companies’ shares resulted in a loss of $27 billion.

The AI element notably led to Alibaba’s stock outpacing its more commerce-reliant rivals this year. Alibaba has also leveraged the growth of an international arm that encompasses some of the world’s most-recognised online shopping platforms, from Lazada to AliExpress.

Investments in AI and quick commerce

Alibaba is making huge investments in AI, developing large language models to avoid falling behind in a critical technological race, the news report said.

The e-commerce giant views AI as essential to its future, whether in terms of providing cloud computing or coming up with services to compete with major players like OpenAI and DeepSeek.

CEO Eddie Wu said in February that artificial general intelligence, or AGI, was now the company’s primary objective.

In addition to AI, Alibaba is also investing in quick commerce, which includes food delivery and instant shopping. While these investments are margin-eroding, the company’s commerce chief, Jiang Fan, argued that investments in quick commerce had already driven 20% growth in users on its main Taobao marketplace. The company believes that the fledgling division has grown to the point in four months that it can begin to achieve economies of scale.

Future outlook

Alibaba has “China’s best AI enabler thesis,” Morgan Stanley analysts, including Gary Yu, wrote in a research note cited by Bloomberg. That’s as losses from meal delivery and instant commerce peak this quarter, they argued.

Investors are now focused on whether Alibaba will pursue that margin-eroding competition, at a time when it vowed to spend record amounts of money towards developing AI services and computing.

The company has also updated its own open-source video-generating model, which is part of recent upgrades that range from agentic AI services to chatbots.

Now, investors are waiting to see if Alibaba can successfully monetise its AI initiatives in an increasingly competitive market.

From Baidu Inc to Tencent Holdings Ltd, Chinese firms are enhancing and releasing AI models at a rapid pace, increasing the pressure on Alibaba to deliver breakthroughs, Bloomberg said.