In recent years, Alibaba has remained at the forefront of rapid development, particularly in the fields of cloud computing and artificial intelligence (AI). The latest financial report for fiscal year 2025 Q3 highlights Alibaba’s remarkable achievements in key areas and its commitment to significantly increasing investment in AI and cloud computing over the next three years. This strategic adjustment has not only fueled a strong surge in Alibaba’s stock price but also provided investors and industry analysts with a clearer outlook on the company’s future growth potential.

（source: https://ali-home.alibaba.com）

Strong Performance and Soaring Stock Price

In Q3 of fiscal year 2025, Alibaba reported revenue of RMB 280.15 billion, reflecting an 8% year-on-year growth. Net profit soared 333% year-on-year to RMB 46.434 billion. These outstanding results exceeded market expectations, particularly with the continued growth of Alibaba’s e-commerce business and the rapid expansion of its cloud computing and AI segments, providing the company with a solid financial foundation.

Following the earnings announcement, Alibaba's stock price surged nearly 11% to HKD 134. This strong performance demonstrates the market’s confidence in Alibaba’s future prospects. With increased investment in AI and cloud computing, investors have grown even more optimistic about the company’s long-term growth trajectory.

Strategic Transformation: Focus on AI and Cloud Computing

Alibaba’s success extends beyond its traditional e-commerce business. CEO Wu Yongming made it clear during the earnings call that AI will be the company’s strategic core for the next three years, with substantial investments planned in three key areas:

• AI Infrastructure Development

As AI evolves, infrastructure requirements are becoming increasingly significant. Recognizing this, Alibaba plans to invest more in AI and cloud computing infrastructure over the next three years than in the past decade combined. This ambitious goal reflects Alibaba’s strong belief in the long-term potential of AI and its commitment to maintaining leadership in the global cloud computing market.

To meet the growing demand for computational power and data processing in the AI era, Alibaba has intensified its investment in hardware infrastructure and is expanding its global cloud computing and AI infrastructure footprint. This move will not only bolster Alibaba Cloud’s capabilities but also accelerate AI-driven applications and innovations across various industries.

• Development of AI Foundation Models

In AI development, foundational models play a crucial role. Alibaba’s Qwen2.5-Max AI model, released last year, has already achieved industry-leading results in multiple benchmark evaluations. Looking ahead, Alibaba plans to further invest in foundational AI model research and development to maintain its technological edge and drive productivity transformation across industries.

The advancement of AI foundational models is critical not only to Alibaba’s technological leadership but also to the widespread adoption of AI-native applications. From smart manufacturing to autonomous driving, from speech recognition to medical imaging, breakthroughs in AI foundational models will unlock unprecedented transformation opportunities across industries.

• AI-Driven Transformation of Existing Businesses

Alibaba’s e-commerce platforms and internet services have long been the core drivers of its revenue. During the earnings call, Wu Yongming emphasized the impact of AI technology on upgrading existing business models. As AI advances, Alibaba will continue investing in AI applications within its e-commerce and internet platforms to enhance user experience and operational efficiency.

For example, AI-powered smart recommendations can help Alibaba’s e-commerce platforms deliver more precise product suggestions to consumers, increasing conversion rates. In logistics, AI-driven route optimization can shorten delivery times and improve overall efficiency. Additionally, AI can enhance ad targeting and content recommendations, further boosting user engagement and platform activity.

Future Development Plans

Alibaba’s future strategy is not solely dependent on its robust e-commerce and cloud computing operations. The company’s substantial AI investment aims to seize the technological high ground of the next generation. Wu Yongming reaffirmed that Alibaba will focus on three major business areas: domestic and international e-commerce, AI-driven cloud computing technology, and internet platform products. Clearly, AI and cloud computing will be the core pillars of Alibaba’s future growth, and its strategic expansion in these areas will unlock significant new opportunities.

On a global scale, Alibaba is also accelerating its international expansion efforts. Alibaba Cloud has already established data centers in multiple countries and continues to expand its global market share. As the global data center industry grows rapidly, Alibaba is well-positioned to further consolidate its leadership in cloud computing.

Conclusion

Alibaba’s latest financial report not only highlights steady growth in its traditional e-commerce and cloud computing segments but also underscores the company’s strategic focus on AI-driven innovation. Through massive investments in AI infrastructure, foundational model development, and AI-powered business transformation, Alibaba is actively building a powerful technological ecosystem.

As AI and cloud computing continue to merge, Alibaba is poised to achieve groundbreaking advancements in the coming years, solidifying its presence as a global technology leader. Investors are increasingly confident in Alibaba’s future, and with a clear strategic roadmap, the company’s rising stock price is just the beginning. The potential for further growth remains vast and promising.