Growing enthusiasm for artificial intelligence plans at Alibaba Group Holding has once again made it China’s hottest technology stock, as investors rush back into the US$420 billion internet titan.
Hong Kong-listed shares of the company are up 50% in September, making them the best performer on the Hang Seng Tech Index. That marks a turnaround after months of sluggishness on investor concerns over a destructive price war in China’s food-delivery market.
Announcements Wednesday of the firm’s planned hike in AI spending and a new partnership with Nvidia Corp were the latest drivers of gains in its stock, and provided a sentiment boost for peers and suppliers as well. Options data show increasing bets on further gains in Alibaba shares, which remain cheap relative to global peers.
“It was obvious that Alibaba’s valuations were low in 2022-2023, but investors needed a catalyst to buy it — that catalyst has emerged, its potential in AI,” said Jian Shi Cortesi, a fund manager at GAM Investment Management in Zurich. “Now Alibaba is increasingly viewed more as an AI/cloud infrastructure player than strictly an e-commerce name.”
Alibaba Shares Surge on AI Enthusiasm
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In a strange new equation, plans for massive spending are sending companies’ shares soaring as investors wager on who will dominate the future AI landscape. Focus in China is falling more squarely on Alibaba, which emerged earlier this year as a key champion of the Asian nation’s drive to develop homegrown AI technology.
Chinese investors have bought a combined HK$61 billion of Alibaba shares, on a net basis, via trading links between the mainland and Hong Kong in September. That’s the most for any month so far this year.
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China Investors Snapped Up Alibaba Shares in September
Alibaba is “the best AI enabler in China,” Morgan Stanley analysts wrote in a note Wednesday after attending the company’s AI conference in Hangzhou. Its flagship Qwen3-Max model reportedly surpasses GPT-5 and Claude Opus 4, ranking it “among the top three globally,” the analysts wrote.
Options traders are boosting bullish positions, with the cost of contracts on the Hong Kong-listed shares climbing to the highest level since 2022 versus the Hang Seng Tech. Some caution is creeping in, with short interest in Alibaba’s American depositary receipts jumping this week to 6.8% of shares outstanding, the highest in over five years, according to S&P Global data.
Valuations provide further appeal for the stock, however. It’s still trading around 20 times estimated forward earnings, compared with nearly 25 times for Amazon.com Inc. and more than 30 times for Microsoft Corp.
“I wouldn’t say there’s a ‘best AI stock,’ but Baba is the best parallel to the US hyperscalers,” said Xin-Yao Ng, a fund manager at Aberdeen Investments. “Among the large cloud players in China, they are also the most aggressive,” surpassing investment levels at Tencent Holdings Ltd. and Baidu Inc.
