U.S.-listed Alibaba Group stock jumped Wednesday after its leadership pledged to boost spending on AI initiatives. Shares of the Chinese e-commerce and cloud-computing giant reached their highest point since October 2021.
Alibaba expects to spend more than its previously announced target of $53 billion over three years for AI infrastructure, Chief Executive Eddie Wu said at an industry conference in China Wednesday. The announcement comes a day after Alibaba rolled out a large update to its Qwen open-source large language model. Separately, Alibaba announced it will integrate a suite of AI development tools from Nvidia into Alibaba Cloud to helped develop "physical AI," a term that includes robots and self-driving cars.
"The industry's development speed far exceeded what we expected, and the industry's demand for AI infrastructure also far exceeded our anticipation," Wu said at the conference, as quoted by Bloomberg. "We are actively proceeding with the 380 billion (yuan) investment in AI infrastructure, and plan to add more."
Alibaba stock jumped 8% to close at 176.44 on the stock market today.
The big move highlights continued enthusiasm from investors about the return on AI investments. Oracle stock has soared in recent weeks as the Texas-based software giant committed to boosting investments to meet fast-growing AI cloud computing demand.
CFRA analyst Angelo Zino reiterated a buy call for Alibaba's U.S. stock in a client note Wednesday. Alibaba's AI spending could restrain free-cash-flow, Zino wrote, but "we think it will help further accelerate cloud and total revenue growth."
Alibaba Stock Recent Breakout
U.S.-listed Alibaba stock has rallied more than 108% year-to-date. That includes a 31% gain in September
Alibaba was the IBD Stock of the Day for Aug. 29, after it gapped higher following its fiscal Q1 earnings report and news it was developing its own AI chip. Shares broke out above a consolidation pattern buy point of 148.43 earlier this month and have since climbed beyond a 5% buy zone, according to MarketSurge
Meanwhile, Alibaba stock has an IBD Composite Rating of 91 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one.
E-commerce stocks have outperformed this year, despite the global tariff uncertainty. The 59-stock Retail-Internet industry group tracked by IBD ranks 22nd among 197 industry groups, based on six-month price performance. The overall group is up 27% year to date. Alibaba's IBD Composite Rating Alibaba ranks 7th overall within that group, according to IBD Stock Checkup.
