Alibaba Group stock continued its red-hot rally after reporting December quarter results Thursday. Alibaba's fiscal third quarter earnings and revenue topped estimates, while the company's AI push helped accelerate growth for its cloud business.
Alibaba said that it earned an adjusted 21.39 yuan per American depositary share on sales of 280.38 billion yuan, or $38.4 billion, for the December-ended quarter. Analysts polled by FactSet projected Alibaba would post earnings of 19.47 yuan per ADS on sales of 278.49 billion yuan.
Revenue growth of 7.6% year over year, based on local currency, accelerated from 5.2% growth in Alibaba's September quarter.
"This quarter's results demonstrated substantial progress in our 'user first, AI-driven' strategies and the reaccelerated growth of our core businesses," Chief Executive Eddie Wu said in a news release.
Revenue from Alibaba's Cloud Intelligence Group increased 13% year over year to 31.7 billion yuan, compared to estimates of 9.8% growth. Cloud sales grew 7% in Alibaba's September quarter.
On the stock market today, Alibaba stock rose more than 8% to close at 135.97.
Alibaba Pledges Big AI Investments
On a call with analysts Thursday, Wu said Alibaba will "aggressively invest in AI infrastructure" over the next three years, according to a FactSet transcript. That will include work on its own foundational models.
On Jan. 29, Alibaba released an AI model it said outperforms the models of China-based rival DeepSeek. Alibaba's models are also comparable to "top tier models," the company said.
The investments are seeing results. Alibaba stock soared last week on news that Apple will be working with Alibaba to introduce AI features to iPhones in China.
Meanwhile, Alibaba's news release Thursday said that AI-related product revenue in its cloud business grew by triple digits year over year for a sixth consecutive quarter.
Wu told analysts that he expects revenue growth for Alibaba's cloud group to continue accelerating this year.
"With the rapid adoption of AI technology across industries, customer demand for Alibaba Cloud products has surged," Wu said, according to the FactSet transcript.
Alibaba Stock: Technical Ratings
Alibaba has rallied 60% through the first two months of the year. With an intraday high of 144.51, Alibaba stock touched its highest value since November 2021.
Alibaba stock broke out of a cup-with-handle pattern on Feb. 7, above a 103.67 buy point, according to MarketSurge.
Meanwhile, Alibaba stock has an IBD Composite Rating of 95 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Alibaba's IBD Relative Strength Rating is 95 out of 99. The RS Rating means that BABA stock has outperformed 95% of all stocks in IBD's database over the past 12 months.
