Company announced that its AI-related product revenue

Alibaba has once again captured the attention of global markets, with its U.S.-traded shares surging by nearly 70% so far in 2025, positioning it as a top investment choice within the Chinese artificial intelligence sector.

On Thursday, the company announced that its AI-related product revenue continued its impressive growth streak, posting triple-digit increases for the sixth consecutive quarter as of December. Alibaba’s AI prowess is showcased through its Qwen AI model, which not only competes effectively with DeepSeek but has also secured a significant deal for iPhones sold in China.

In a dramatic return to the public eye, Alibaba’s founder, Jack Ma, attended a high-profile meeting on February 17, hosted by Chinese President Xi Jinping for entrepreneurs, including DeepSeek’s Liang Wenfeng. This appearance marks a notable comeback for Ma, who had been previously sidelined in the political arena.

Financial analysts are bullish on Alibaba’s prospects. Jefferies recently set a price target of $156 for Alibaba’s shares as of February 20, suggesting a potential upside of more than 8% from its last closing price of $143.75. In a strategic shift, UBS equity strategists have favored Alibaba over PDD in their model portfolio, citing Alibaba’s robust AI exposure and quantitative factors as key reasons for their preference.

Despite the intense focus on AI opportunities within China, UBS noted that the increase in stock crowding for Chinese AI-related companies has been modest this year, only rising by 0.02 on their scoring system. This is in stark contrast to the 0.2 increase seen in U.S. AI-related stocks over the past two years. Among large Chinese internet technology companies, Alibaba topped the list with the highest crowding score, which, according to UBS’s Quants team, typically signals potential near-term outperformance.

The broader market reflected this optimism, with Hong Kong’s Hang Seng index reaching a three-year high on Friday, driven by significant gains in shares of China Unicom, Lenovo, and Alibaba.

Amidst this bullish backdrop, JPMorgan internet analyst Alex Yao advised investors on February 17 to hold their positions in Alibaba, suggesting that it’s not yet time to rotate to AI trade laggers like Tencent and Baidu. Both companies are expected to benefit from AI development, albeit in different ways and with varying levels of risk.

In contrast, U.S.-listed shares of Baidu have risen by about 8% for the year, after announcing a 26% year-on-year increase in AI Cloud revenue, which reached 7.1 billion yuan in the fourth quarter. Meanwhile, shares of Tencent traded in Hong Kong have seen a notable increase of about 24% for the year, even before their latest earnings report.

As Alibaba continues to lead, the focus on AI development across major Chinese tech firms underscores a dynamic and rapidly evolving landscape, with significant implications for global investors and technology sectors alike.