E-commerce giant Alibaba’s (BABA) latest Q1 FY26 earnings report reignited optimism in China’s tech sector. The company’s strong AI progress and better-than-expected cloud results sent the stock up nearly 19%, adding over $50 billion in market value. The rally lifted peers like Baidu (BIDU) and Tencent (TCEHY) as investors returned to Chinese AI names.
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What Drove Alibaba’s Rally?
Alibaba posted triple-digit growth in AI-related product revenue and a 26% jump in cloud sales, the segment most closely tied to AI demand. These gains helped offset concerns about slowing growth in e-commerce and rising competition in food delivery.
The results showed that Alibaba is moving beyond retail and is now a core player in China’s AI and cloud race.
The stock’s nearly 19% rise marked its biggest one-day rally since November 2022, with turnover hitting record highs in Hong Kong. The surge gave a much-needed boost to investor sentiment across the broader sector, with Baidu and Tencent also posting solid gains.
Can AI Momentum Last?
Analysts welcomed the results, with Morgan Stanley calling Alibaba “China’s best AI enabler thesis.” The firm highlighted Alibaba’s strong cloud business and AI push as key drivers for future growth.
Still, investors will be watching to see if demand stays strong and if BABA can turn its AI investments into steady profits. The push into quick commerce also continues to weigh on margins, leaving some investors cautious about near-term earnings.
Nevertheless, for now, Alibaba’s strong AI and cloud growth has overshadowed those worries.
Is Alibaba Stock a Good Buy Right Now?
Analysts remain bullish about Alibaba’s stock trajectory. With 12 Buy ratings and one Hold rating, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $148.55 implies about 24.24% upside potential from current levels. However, it’s worth noting that estimates will likely change following today’s earnings report.
