Hong Kong Stock Concept Tracking | Alibaba's latest performance is out, AI shows outstanding performance, pay attention to investment opportunities brought by the spillover effects of AI technology (with concept stocks)

According to the Zhitong Finance APP, Alibaba released its third-quarter results for the fiscal year 2025 on February 20. The data shows that Alibaba achieved revenue of 280.15 billion yuan in this quarter, a year-on-year increase of 8%; operating profit of 41.205 billion yuan, a year-on-year increase of 83%; and net profit of 46.434 billion yuan, a year-on-year increase of 333%. Alibaba Cloud's commercial revenue returned to double-digit growth, reaching 13%, and revenue from AI-related products maintained triple-digit growth for six consecutive quarters. Following the release of this financial report, Alibaba (BABA.US) saw a significant surge in its U.S. stock, rising over 14% at one point during trading. CITIC Securities released a research report stating that considering the gradual improvement of the company's core business fundamentals in Taobao and Tmall, as well as its leading strength and spillover effects in the AI field, it is recommended to pay attention to the future investment prospects of AI in areas such as healthcare and film.

Alibaba Group CEO Eddie Wu stated: “The performance this quarter fully demonstrates significant progress in our ‘user-first, AI-driven’ strategy, with core business growth accelerating again. This quarter, the customer management revenue of Taotian Group grew by 9%, benefiting from improved user experience and effective commercialization initiatives. Looking ahead, the revenue growth of the AI-driven Cloud Intelligence Group will continue to increase. We will continue to execute our strategy focused on e-commerce and cloud computing, continuously investing to drive long-term growth.”

At the World Governments Summit 2025 held in Dubai, UAE, Alibaba co-founder and chairman Joseph Tsai responded that Apple and Alibaba will collaborate to develop AI features for Chinese iPhone users. Alibaba Tongyi has advantages in technology, openness, ecology, infrastructure, and services. This cooperation is expected to bring a win-win situation for both Apple and Alibaba. For Apple, this collaboration is expected to help stabilize its declining sales, as domestic smartphone manufacturers have successively launched AI features. Apple is expected to enhance its product functionality, stimulate replacement demand through intelligence, and alleviate the sales downturn.

For Alibaba, if it can be applied in Apple products, it is expected to significantly enhance its C-end daily active users and brand recognition, bridging the gap with C-end products like DeepSeek, Doubao, and Kimi, while also potentially increasing Alibaba Cloud's revenue scale and profitability.

China Merchants Securities pointed out that this cooperation validates the strong competitiveness and leading position of Alibaba's AI large model both domestically and globally. Alibaba Cloud, as the largest cloud provider in China with globally leading AI large model capabilities, has very broad development space and is expected to deeply empower and synergize with the group's e-commerce and other businesses. The firm believes that Alibaba's valuation paradigm should shift from value to growth, with significant room for valuation improvement compared to leading overseas cloud providers.

JP Morgan mentioned in its research report that China's generative AI consumption will further increase the revenue growth rate of cloud business, and the cloud business may bring dual momentum to Alibaba's stock price: first, favorable adjustments to Alibaba Cloud's revenue expectations, and second, an increase in Alibaba Cloud's valuation multiples.

This financial report from Alibaba shows that the company's e-commerce fundamentals are stabilizing, and high investments are beginning to yield results. Starting in 2024, Alibaba has launched multiple adjustments, placing greater emphasis on GMV and user experience; including canceling the pricing power of some non-strongly comparable products, adjusting the search algorithm logic to focus on GMV as the core indicator, offering free business consulting, and launching site-wide promotions to integrate free and paid traffic During the 618 period, Taotian achieved a growth of over 10% despite a high base of GMV, narrowing the gap with Pinduoduo and short video e-commerce; short video e-commerce still maintained a growth rate superior to other e-commerce platforms, but it is no longer accelerating, and the impact on the market share of traditional e-commerce platforms like Taotian has significantly weakened.

In addition, Alibaba Cloud's profit margin has improved, and AI progress is positive. Alibaba Cloud's overall operations are stable, adjusting its business structure and enhancing profit margins. In terms of AI, Alibaba has strong capabilities, with the Tongyi large model ranking high on authoritative evaluation lists; a significant price reduction in May boosted demand. At the recently held 2024 WAIC, the company disclosed that in the past two months, the download volume of the Tongyi Qianwen open-source model has doubled, surpassing 20 million times; the number of customers for Alibaba Cloud's Bailian service has increased from 90,000 to 230,000, a growth of over 150%. Capital expenditure in Q4 2023 has turned positive, with a significant increase in Q1 2024, and the pull of AI on cloud business is expected to be further reflected.

CITIC Securities believes that the improvement in model capabilities and the decrease in deployment costs are expected to drive rapid growth in demand from both C-end and B-end, and in the medium to long term, this will catalyze Alibaba Cloud's performance acceleration.

Regarding the investment prospects of AI in the medical field, Goldman Sachs released a report stating that there are huge investment opportunities within it. Cutting-edge innovations in AI healthcare, can not only rely on the "AI medical brain" YiduCore to create professional, efficient, precise, and inclusive AI products and solutions but also comprehensively cover areas such as public health, clinical and disease research, medical management, new drug development, and health management.

During the analyst conference call that evening, Eddie Wu stated that looking to the future, Alibaba will continue to focus on three major business types: domestic and international e-commerce, AI + cloud computing technology business, and internet platform products. In the next three years, Alibaba will increase investment around AI as the strategic core, focusing on AI infrastructure, foundational model platforms, AI-native applications, and the AI transformation of existing businesses.

JP Morgan released a research report stating that there are three major factors driving Alibaba's stock price further upward, including the revaluation of Alibaba Cloud as a primary asset in China's cloud market, the positive revision of cloud revenue estimates driven by increased consumption of AI functionalities, and the positive revision of profitability estimates for Chinese e-commerce. The firm still views Alibaba as the top choice among Chinese internet stocks.

Related concept stocks:

Alibaba-SW (09988): In January this year, Alibaba launched the new open-source next-generation multimodal model Qwen2.5-VL and introduced the flagship model Qwen2.5-Max based on the MoE architecture, which ranks at the global leading level in multiple authoritative benchmark evaluations. The Tongyi Qianwen Qwen large model has become one of the largest AI model families in the world, with the number of derivative models developed based on the Qwen model family on Hugging Face exceeding 90,000 as of January 31, 2025.

Alibaba Health (00241): The company can leverage its parent company Alibaba-W's industry-leading foundational large model to promote the development of its pharmaceutical e-commerce business. The investment scope brought by AI is broader, covering areas such as internet hospitals, and will benefit from the trend of emerging open-source models like DeepSeek. Additionally, the outbreak of influenza in various regions since the end of last year could provide upward space for Alibaba Health's e-commerce GMV growth Alibaba Pictures (01060): According to market news, recently, "Black Myth: Wukong" officially announced a strategic cooperation with Alibaba Group's IP operation management and commercialization development platform Aliyu and Tmall's trendy toy industry, and will soon settle on Tmall. In the future, "Black Myth: Wukong" will collaborate with Aliyu to strengthen its brand influence in the IP derivative field, continuously enhance IP value, and jointly explore more new ways to play with IP.

Bilibili-W (09626): Bilibili's revenue for the fourth quarter of 2024 is expected to be 7.73 billion yuan, a year-on-year increase of 22%, with market expectations of revenue at 7.639 billion yuan. The financial report shows that Bilibili's total revenue for the entire year of 2024 reached 26.83 billion yuan, a year-on-year increase of 19%. In the fourth quarter, Bilibili's advertising business revenue was 2.39 billion yuan, a year-on-year increase of 24%; game business revenue was 1.80 billion yuan, a year-on-year increase of 79%. In the fourth quarter, the adjusted net profit and net profit under U.S. GAAP were 450 million yuan and nearly 89 million yuan, respectively, achieving a comprehensive profit turnaround