Bullish bets increase! AI is ambitious, Alibaba occupies the "C position" of Chinese concept technology stocks

Due to spending on artificial intelligence projects, Alibaba has once again become the hottest tech stock in China. Investors are flocking back to the stock market of this $420 billion internet giant. On Wednesday, Alibaba (BABA.US) saw a significant rise in its U.S. stock, with an increase of up to 10% at one point, ultimately closing up 8%. The Hong Kong stock has risen 50% so far in September, making it the best-performing stock in the Hang Seng Tech Index.

On Wednesday, the company announced plans to increase its investment in the field of artificial intelligence and establish a new partnership with NVIDIA (NVDA.US). These announcements have become the latest driving force behind its stock price increase and have also boosted the sentiment of peers and suppliers. Options trading data shows that investors are increasingly betting on further rises in Alibaba's stock, while Alibaba's stock price remains relatively low compared to other global companies. This marks a turnaround for the company's stock price after months of sluggishness due to a price war in the takeaway market.

Jian Shi Cortesi, a fund manager at GAM Investment Management, stated, “It is clear that Alibaba's valuation was low during the period from 2022 to 2023, but investors needed an incentive to buy it—this incentive has now appeared, which is its potential in the field of artificial intelligence. Nowadays, people increasingly view Alibaba as a company that integrates artificial intelligence and cloud infrastructure, rather than just an e-commerce business.”

Recently, a new phenomenon has emerged in the U.S. stock market, where large-scale AI investment plans have led to significant increases in tech stock prices, as investors are betting on the emergence of the next leader in the AI industry. In China, the focus is increasingly on Alibaba, which has become a key driver in the development of local artificial intelligence technology in Asian countries earlier this year.

So far this year, mainland Chinese investors have purchased a total of HKD 61 billion (approximately USD 7.8 billion) worth of Alibaba's Hong Kong stocks (net purchases) in September, marking the largest single-month purchase volume this year.

Morgan Stanley analysts released a report after attending Alibaba's AI conference in Hangzhou on Wednesday, stating that Alibaba is "China's outstanding AI leader." They noted that its flagship product, the Qwen3-Max model, is reportedly surpassing GPT-5 and Claude Opus 4, placing it among the "top three" globally. Options traders are increasing bullish positions, and the cost of Alibaba's Hong Kong stock-related contracts has risen to its highest level since 2022 relative to the Hang Seng Tech Index. However, cautious sentiment is quietly spreading; according to data from S&P Global, the short interest in Alibaba's American Depositary Receipts has risen to 6.8% of the outstanding shares this week, the highest level in over five years.

However, the valuation also adds more appeal to the stock, with its current price-to-earnings ratio at about 20 times expected future earnings, while Amazon (AMZN.US) is close to 25 times, and Microsoft (MSFT.US) exceeds 30 times.

Aberdeen Investments fund manager Xin-Yao Ng stated, "I wouldn't say there is a 'best AI concept stock,' but Alibaba is the company most similar to the U.S. mega-cap firms. Among China's large cloud service companies, it is also the most aggressive, with investment levels even exceeding those of Tencent."