Hong Kong stocks have been on fire in 2025. Capital flowed into healthcare, consumers, and not surprisingly – tech. These are driving the Hang Seng Index higher.
While I’ve written about Tencent stealing the show, with its shares hitting close to its record peak, Alibaba has been on a steady climb. All that changed in August.
In fact, Alibaba shares jumped 35% over the past month.
Alibaba latest June 2025 earnings: This changes everything
Alibaba reported results that signaled a real comeback. During its first financial quarter Jun 2025 results, revenues grew 2% to hit ~CNY247 billion. At first glance, not a big jump.
But if you stripped out its divested business including Sun Art and Intime, this is a solid 10% growth.
What’s more, its net income jumped 78% y/y to CNY43 billion.
However, if we exclude its unrealized gains from equity investments and a disposal of the local consumer service business of Trendyol and a drop in its income from operations, its adjusted net income fell 18% y/y.
Yet, the market loved it because it’s one of the few profitable tech giants today. Alibaba’s Hong Kong listed shares surged ~18% in the days after results.
That’s the biggest jump in over three years.
Three big reasons what’s driving all this…
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Alibaba’s massive warchest for growth in food delivery
China’s food delivery market is an intense competition. I’ve recently written about Meituan here. You see, three giants are locked in a brutal price war.
For instance, Meituan reported awful second quarter results. Its profits crashed 90% because of this price war. Management even said its third quarter results might not be profitable. Then, JD warned his profits could also vanish in the coming quarter.
But here’s the thing: Alibaba has the strongest balance sheet. This tech giant sits on ~CNY416 billion of cash. This is compared to JD’s CNY220 billion and Meituan’s cash of CNY171 billion each.
That’s three times more firepower. That’s plenty of dry powder for Alibaba to ramp up its food delivery business.
Put it this way, Alibaba can afford to spend big and wait. Here’s the other thing: Its already diversified business means food delivery losses don’t hurt as much.
Here’s what caught my attention: CEO Eddie Wu said previously, Alibaba’s food delivery was just a third the size of its competitors. Market share was below 20% across China.
But in just four months of aggressive spending, Alibaba’s food delivery order volumes rose four times. That’s huge growth.
With the biggest balance sheet amongst tech giants, playing fast catch up, time is on Alibaba’s side.
Taobao’s Instant Commerce is exploding
In April, Alibaba launched “Taobao Instant Commerce” on its main shopping app. This delivers products within one hour. The results? Impressive.
Management said: “First, our peak daily order volume reached 120 million, and weekly average daily orders in August reached 80 million.
Second, on the user side, quick commerce’s monthly active consumers reached 300 million, representing 200% growth compared to before April.
Third, on merchant supply, the rapid growth in business scale has attracted a large number of new users and merchants to join Taobao Instant Commerce. High-quality merchant supply in particular has reached industry-leading levels.
Fourth, on fulfillment capacity, the number of daily active riders reached two million, a three-time increase from April. That also means we have created over a million new jobs.”
This is way better than company expectations. Alibaba’s Instant retail revenue hit CNY14.8 billion, up 12% from last year. And this is just the beginning.
Management also thinks instant commerce could add CNY1 trillion in transaction value over three years. That’s huge.
But it’s not just about food delivery. Today, Taobao Instant Commerce sells everything – electronics, clothes, medicine, toys.
In August , Taobao’s monthly users grew 25% compared to last year. For a massive platform like Taobao, 25% growth is incredible. And it also proves this strategy is working.
Alibaba’s true growth potential – AI
But the real star is Alibaba’s cloud and AI business.
The thing is, Cloud revenue jumped 26% to RMB33.4 billion. That’s much faster than the previous quarter’s 18% growth.
Here’s the kicker: AI-related products have grown triple-digits for eight straight quarters. Eight quarters! That’s two years of explosive growth.
Its CEO Eddie Wu said AI revenue is now a “significant portion” of external customer sales. The company spent over CNY100 billion on AI infrastructure and R&D in the past year. And they’re not slowing down.
Alibaba has committed to spend CNY380 billion over three years on cloud and AI. Recent reports say it’s working on a new AI chip. That news helped push the stock even higher.
That’s a big bet. But Alibaba has the money and technology to make it work.
What this means for investors
In my view, Alibaba’s comeback isn’t just about one good quarter. The more I read into its latest results, the more I’ve come to believe three important things.
First, the company still has an enormous competitive advantage – deep pockets, huge user base, and strong proprietary technology.
Next, management is making smart bets, including expanding its food delivery segment and diving into the world of AI, which China is growing fast.
This is despite China’s food delivery war, which could force companies like Alibaba to keep burning cash. And China consumers are still careful with spending.
Lastly, valuations for Alibaba look attractive over the last couple of years. Today, China’s biggest e-commerce player trades at more sensible valuations for its huge potential growth.
My final thoughts
Here’s the thing: Alibaba’s latest results prove this internet giant isn’t done yet. While other tech companies like Tencent grabbed headlines, Alibaba is quietly building new growth engines.
Its food delivery is gaining share. And it’s expanding its AI business. What’s more, steady revenues also mean Alibaba’s core shopping platform is growing.
Having said that, China internet stocks are notoriously volatile. Success in food delivery and AI will take time to prove. And the broader Chinese economy still faces challenges.
