Jack Ma returns, Alibaba strides into the AI era

Author | Liu Baodan

Editor | Zhou Zhiyu

As a representative figure of China's private enterprises, Jack Ma once pioneered the e-commerce model in China. Now, more than twenty years later, he is once again betting on the AI track with Alibaba.

On February 17, Jack Ma, along with well-known entrepreneurs such as Ren Zhengfei, Lei Jun, Zeng Yuqun, and Ma Huateng, attended a symposium for private enterprises in Beijing. The meeting affirmed the development prospects of the private economy and emphasized that it is the right time for private enterprises and entrepreneurs to showcase their talents.

The era of AI is accelerating, and Jack Ma's reappearance after a long hiatus undoubtedly serves as affirmation and encouragement for Alibaba's AI efforts.

After two years of catching up in the AI race, China's AI assets are undergoing a revaluation, with Alibaba becoming the core of the narrative surrounding the revaluation of Chinese tech assets, and its stock price reaching a three-year high. Moving forward, Jack Ma will lead Alibaba into the AI era.

Barometer

As the soul of Alibaba, Jack Ma's every move has long been a barometer for the outside world to gauge Alibaba's direction.

Before the symposium for private enterprises, Jack Ma had already begun to make frequent appearances. Since February, he first appeared at Alibaba's headquarters in Hangzhou, then made brief visits to the Xianyu and Quark departments, and subsequently showed up in Changsha to visit the Hema Fresh store at the Star Sands Mall.

At the same time, Alibaba and Apple reached a cooperation agreement to provide AI services for the domestic version of the iPhone. Apple has very strict requirements for its suppliers, and the core reason for choosing Alibaba among many domestic AI models is its model and application deployment capabilities.

More importantly, Apple places great importance on the performance of its partners in terms of compliance and influence. Having the endorsement of a global tech giant like Apple means that Alibaba has taken a significant step towards the AI era.

Alibaba's journey to this point has not been easy. Much of this was already evident two years ago.

In August of last year, the State Administration for Market Regulation announced that Alibaba's three-year rectification had been successfully completed with good results. Subsequently, Alibaba smoothly completed its dual primary listing on the Hong Kong Stock Exchange and was quickly included in the Hong Kong Stock Connect. Various signs indicate that the tight restrictions on Alibaba have been lifted.

Over the past three years, Alibaba's stock price has dropped 75% from its historical high more than three years ago, competition in the e-commerce main battlefield has intensified, and demand for cloud services has been suppressed. Amidst the turbulence, Alibaba gradually stabilized the competitive landscape of the e-commerce market and locked in its two core strategies of e-commerce and AI, all of which bear Jack Ma's influence.

According to a summary by Wall Street Watch, Jack Ma has made at least three key statements that not only pointed out the development direction for Alibaba and boosted the competitive morale of the Alibaba team but also influenced Alibaba's culture and values.

In May 2023, Jack Ma held a communication meeting for Taotian, pointing out three directions: returning to Taobao, returning to users, and returning to the internet. At the same time, Jack Ma emphasized that the organization of Taobao and Tmall should achieve flat management and encourage the company to boldly promote young people, which led to the rise of the post-80s generation.

At the end of November 2023, Pinduoduo's market value surpassed Alibaba, becoming the largest Chinese concept stock in the U.S. market at that time. Faced with the low morale of Alibaba employees, Jack Ma responded just before Alibaba's market value was about to be surpassed, stating, "I firmly believe that Alibaba will change, Alibaba will improve." In April 2024, Alibaba co-founder and chairman Joseph Tsai admitted for the first time that Alibaba had fallen behind in recent years, and the problem with the Taotian Group was neglecting user experience. "We shot ourselves in the foot and did not truly focus on creating value for users."

As the outside world worried about whether Alibaba could turn the situation around, Jack Ma stepped up again. He highly praised the reform courage of the new management team formed by Joseph Tsai and Eddie Wu, stating that Alibaba had returned to a healthy growth track and supported continued reforms.

For the first time in five years since his retirement, Jack Ma shared his thoughts on Alibaba's past and future in a lengthy article. "In the past year, the new management team has made various changes, not only breaking through yesterday's rigid strategies but also building the future Alibaba," Jack Ma stated.

Subsequently, Alibaba gradually found its rhythm in the e-commerce market. In November last year, Alibaba released its Q2 financial report for fiscal year 2025, achieving revenue of 236.503 billion yuan, a year-on-year increase of 5%, demonstrating stable performance. During the Double Eleven shopping festival, Alibaba's total transaction volume saw strong growth, with record highs in brand transactions and buyer numbers.

While Alibaba's e-commerce business gradually returned to the right track, Jack Ma repeatedly expressed his support for AI, firmly optimistic about the AI era.

Jack Ma believes that AI is the key to solving e-commerce competition. "The AI e-commerce era has just begun, presenting opportunities and challenges for everyone."

"Looking from today, the changes that the AI era can bring in the next 20 years will exceed everyone's imagination because AI will be a greater era." At the 20th anniversary meeting of Ant Group, Jack Ma stated that AI would be the key to unlocking the next stage for Ant.

Now, with Jack Ma officially returning to the public eye, Alibaba will also usher in a brand new AI era.

Takeoff Again

Eleven years ago, Jack Ma led the trillion-dollar e-commerce platform Alibaba to the New York Stock Exchange, breaking the global IPO record with a financing amount of $25 billion, making Alibaba's listing one of China's most successful business stories.

Eleven years later, Alibaba's stock price once again shows unprecedented potential, marking a critical moment in Alibaba's more than 20 years of development. The capital market's valuation logic for Alibaba has shifted from e-commerce to AI, showcasing Alibaba's growth imagination as a cloud vendor.

Since December last year, DeepSeek has sparked a revolution in computing power costs, leading to a revaluation moment for Chinese AI assets. As a tech giant reinvesting in AI, Alibaba has become a core target in this round of revaluation of Chinese AI assets.

The TMT group leader of the billion-dollar private equity firm Hexiehui, Ming Chen, believes that after DeepSeek's explosive growth, DAU traffic has rapidly expanded, and DeepSeek's existing computing power cannot support such immense wealth, with the expansion demand to be undertaken by cloud vendors including Alibaba Cloud, thereby driving performance growth.

Cloud computing is a scale game; the larger the scale, the higher the profit. In Ming Chen's view, the domestic cloud vendor landscape is basically clear, consisting of Alibaba, Tencent, and Huawei, with the only potential variable being ByteDance.

IDC data shows that Alibaba Cloud has maintained the top market share in China's relational database overall market. Driven by double-digit growth in public cloud business, Alibaba Cloud has also achieved a 38% market share in the public cloud relational database market, ranking first for five consecutive years On February 17th, during intraday trading, Alibaba's Hong Kong stock reached a high of HKD 129.5, setting a new three-year record. Since the beginning of the year, Alibaba's market value has surged by over HKD 600 billion, with the latest market value reaching HKD 2.32 trillion (approximately RMB 2.17 trillion).

The valuation of Alibaba AI in the capital market is primarily determined by two factors: first, the capital market cycle and market sentiment; in the long run, the valuation of Alibaba AI must align with its business growth potential.

Morgan Stanley's analyst team led by Yang Liu found in their latest report that the valuation of Chinese data center (IDC) companies is discounted by about 50% compared to their global peers, which is particularly prominent in the current market environment. "With the increase in capital expenditure on large-scale AI, IDC companies are expected to see a significant improvement in EBITDA, thereby driving valuation recovery."

As of the close on February 14th Eastern Time, Amazon and Microsoft's market values were USD 2.42 trillion (approximately RMB 17.6 trillion) and USD 3.04 trillion (approximately RMB 22.1 trillion), respectively. It is believed that relative to giants like Amazon AWS, Alibaba AI still has significant potential for valuation reassessment.

On November 15, 2024, Alibaba announced its latest quarterly results, with Alibaba Cloud's quarterly revenue at RMB 29.61 billion, a year-on-year increase of 7%. This growth is mainly due to Alibaba Cloud shifting its product structure towards higher-margin public cloud products, with AI-related product revenue achieving triple-digit year-on-year growth for five consecutive quarters.

Currently, Alibaba Cloud's advantage lies in its comprehensive layout in AI, covering everything from computing power to open-source large models. Alibaba has also applied AI across various business scenarios, including e-commerce, and has invested in startups such as Moonlight and MiniMax.

However, challenges should not be underestimated. Alibaba Cloud faces intense market competition, with its revenue scale being significantly smaller than that of global mainstream cloud providers; for instance, Amazon AWS's revenue scale is 6.7 times that of Alibaba Cloud during the same period.

Jack Ma aims to transform Alibaba into a company that survives for 102 years. Now, a quarter of the time has passed, and Alibaba's capital market narrative has shifted from e-commerce to AI. Whether Alibaba Cloud can seize the opportunities of the AI era and rise accordingly is a crucial battle for Alibaba.

Participating in the seminar is just the beginning; Jack Ma and Alibaba have finally opened a new chapter in AI