**Alibaba’s Revenue Surge Amidst AI Boom Eases Investor Concerns**
Alibaba Group Holding Ltd. has reported a significant increase in revenue driven by China’s artificial intelligence (AI) boom, alleviating investor worries about the escalating competition with Meituan and JD.com Inc. in the e-commerce sector. The company announced a remarkable triple-digit percentage growth in AI-related product revenue, alongside a better-than-expected 26% increase in sales from its cloud division, which is closely linked to the post-DeepSeek AI surge. Following this news, Alibaba’s shares rose over 6% in pre-market trading in the U.S., despite a modest 2% rise in overall revenue and a 3% decline in operating income, totaling 35 billion yuan.
Alibaba’s AI division, recognized as a leader in China’s AI development, has helped mitigate concerns regarding the fierce price competition with JD and Meituan in the food delivery market. This intense rivalry has adversely affected some of the country’s e-commerce giants, with JD’s profits halving in the last quarter and Meituan warning of significant losses, leading to a $27 billion selloff of shares among the three companies this week. The AI aspect of Alibaba’s business has contributed to its stock performance, which has outpaced its more commerce-dependent competitors this year. Additionally, Alibaba has capitalized on the growth of its international arm, which includes well-known online shopping platforms like Lazada and AliExpress.
John Choi from Daiwa Capital Markets expressed optimism, stating, “I feel like the worst has been avoided. Cloud revenue seems to be solid while the losses were not as bad as what the market feared.” Investors are now keen to see if Alibaba will continue to engage in margin-eroding competition, especially as the company has announced record spending on AI services and computing. On Friday, commerce chief Jiang Fan highlighted that investments in quick commerce—food delivery and instant shopping—have already resulted in a 20% growth in users on its main Taobao marketplace. He noted that this emerging division has reached a stage where it can start achieving economies of scale.
Historically, Meituan has dominated the Chinese meal delivery market, leaving Alibaba’s Ele.me in a distant second place. However, this dynamic shifted in 2025 when JD.com, seeking growth during a consumption downturn, offered substantial subsidies to attract diners, prompting Meituan and Alibaba to follow suit. After receiving a warning from industry regulators in August, all three companies committed to halting “disorderly competition.”
**FAQ**
**Q: How has Alibaba’s AI division impacted its stock performance?**
A: Alibaba’s AI division has significantly boosted its revenue, helping the company outperform its competitors in the e-commerce sector, despite challenges from intense market competition.
