Alibaba’s AI Surge: A Stock’s Delightful Rise

shall this stock maintain its jaunty pace?

AI Excitement

The cloud computing division, ever the star of the show, saw a remarkable surge, with revenue climbing 26% to nearly $4.7 billion. This was no mere fluke, but a testament to the alchemy of artificial intelligence, which saw AI product revenue double for the eighth consecutive quarter. The segment’s adjusted EBITA, that most reliable of indicators, also rose 26% to $412 million-a most commendable feat.

The company, ever the social butterfly, forged a most fortuitous alliance with SAP, enabling its clients to operate on Alibaba’s infrastructure. Furthermore, it is diligently crafting a new AI chip, a dashedly clever bit of engineering, for inference. One might say Alibaba is investing with the zeal of a man who has discovered the secret to eternal youth, pledging a staggering $53 billion in AI over the next three years.

While the AI endeavors commanded the spotlight, the e-commerce division, that most steadfast of workhorses, remains Alibaba’s largest revenue stream. Unlike its American counterpart, Amazon, whose AWS has become the crown jewel, Alibaba’s e-commerce platforms-Tmall, akin to Amazon’s marketplace, and Taobao, reminiscent of eBay without the auctioneer’s antics-continue to toil with admirable tenacity.

For years, the e-commerce division has faced challenges, akin to a man attempting to dance in a room full of rocking chairs. Yet, with bold investments and the introduction of Quanzhantui, a most ingenious AI marketing tool, it has begun to reclaim its footing. The results? A 10% revenue increase to $19.6 billion, a feat as satisfying as a well-earned cup of tea.

Alibaba’s foray into quick commerce, that most modern of pursuits, has seen monthly active users balloon to 300 million. A 200% surge since April! The service, which delivers goods in an hour or less, has boosted daily users by 20% and average purchases per user. A most promising development, though it has, regrettably, weighed on profitability.

The international commerce segment, AIDC, also shone brightly, with revenue surging 19% to $4.9 billion. Its EBITA, though still negative at $8 million, represents a marked improvement over previous quarters-a most encouraging sign.

Overall, Alibaba’s revenue edged up 2% to $34.6 billion, with a 10% increase when excluding dispositions. Adjusted EBITA, alas, fell 14% to $5.4 billion, while earnings per ADS dropped 10% to $2.06. Yet, with $52.3 billion in cash and a balance sheet brimming with equity, the company remains in a most robust position.

Is the Stock Still a Buy?

Though the numbers may not sing with the verve of a Broadway chorus, Alibaba’s e-commerce and cloud computing momentum has investors in high dudgeon. The company, with its AI prowess, is swiftly becoming a titan in the Chinese tech sphere, and its new AI chip promises to cement this status.

While the e-commerce division’s investments in quick commerce may temper short-term gains, they offer a glimpse of long-term promise. The AIDC segment, once a source of concern, now glimmers with potential. A most delightful turn of events, if I may say so.

Valuation, that most enigmatic of metrics, reveals the stock trades at a forward P/E of 13 times fiscal 2026 estimates-a most reasonable figure, even after its stellar performance this year.

Thus, with its AI momentum, e-commerce revival, and AIDC progress, Alibaba remains a most compelling proposition. A stock, if you will, that dances with the grace of a well-trained penguin.

2025-09-03 13:15

AI Excitement

Is the Stock Still a Buy?

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