Alibaba Stock Just Got a Major Boost as Financials Justify Its CapEx

Alibaba Group (BABA) has evolved from China’s e-commerce giant into one of the country’s largest cloud computing and artificial intelligence (AI) companies. As Alibaba pours billions into expanding its AI and cloud capabilities, investors have increasingly been asking whether those investments can drive future growth without putting too much pressure on profits. That question has become especially important ahead of the company’s fiscal first-quarter earnings report, when investors will get a detailed look at its June-quarter performance.

On Wednesday, the market got an encouraging early signal. Alibaba’s shares surged 11%, marking their biggest one-day gain since September, after reports from an analyst briefing suggested the company’s June-quarter results were shaping up better than expected. Losses in Alibaba’s instant-commerce business narrowed significantly during the quarter, while overall profitability remained intact. That helped ease concerns that the company’s expensive competition with rivals in food delivery and local services was becoming a bigger drag on earnings.