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Alibaba has staged a quiet $100 billion rally — AI and Jack Ma's return are at the heart of it
BABABABA(BABA) CNBC·2025-03-28 00:18

Core Insights - Jack Ma's internal memo in November 2023 called for Alibaba to "correct its course" during a challenging period for the company [1] - Alibaba's share price has risen nearly 60% in 2023, adding over 100billiontoitsvaluation,asthecompanyseesgrowthinitscorebusinessandAIinitiatives[3][22]−TheChinesegovernmenthasshifteditsstance,nowappearingsupportiveofAlibaba,whichhaspositivelyimpactedinvestorsentiment[19][21]CompanyChallenges−Alibabafacedsignificantchallenges,includinganear−recordlowshareprice,stalledgrowth,rapidmanagementchanges,andintenseregulatoryscrutinyfromBeijing[2][9]−Thecompany′sdownfallbeganafterJackMa′scommentsinOctober2020,leadingtoincreasedregulatoryscrutinyandthecancellationofAntGroup′sIPO[5][7]−Competitionfromnewere−commerceplayerslikePinduoduoandDouyinaddedtoAlibaba′sstruggles[9]StrategicChanges−InMarch2023,Alibabaannouncedasplitintosixseparatebusinessgroupstoenhanceagilityandattractoutsidefunding[10]−LeadershipchangesincludedDanielZhangsteppingdownasCEO,withEddieWuandJoeTsaitakingoverkeyrolestorefocusoncorebusinesses[11][15]−Thecompanyisadoptingastartupmentalitytoimprovedecision−makingspeedandstreamlineoperations[14][15]AIandCloudComputingFocus−AlibabahaspositioneditselfasaleaderinAI,launchingitsfirstAImodel,TongyiQianwen,in2023andmakingitsmodelsopensource[24][25]−Thecompanyplanstoinvestover100 billion to its valuation, as the company sees growth in its core business and AI initiatives [3][22] - The Chinese government has shifted its stance, now appearing supportive of Alibaba, which has positively impacted investor sentiment [19][21] Company Challenges - Alibaba faced significant challenges, including a near-record low share price, stalled growth, rapid management changes, and intense regulatory scrutiny from Beijing [2][9] - The company's downfall began after Jack Ma's comments in October 2020, leading to increased regulatory scrutiny and the cancellation of Ant Group's IPO [5][7] - Competition from newer e-commerce players like Pinduoduo and Douyin added to Alibaba's struggles [9] Strategic Changes - In March 2023, Alibaba announced a split into six separate business groups to enhance agility and attract outside funding [10] - Leadership changes included Daniel Zhang stepping down as CEO, with Eddie Wu and Joe Tsai taking over key roles to refocus on core businesses [11][15] - The company is adopting a startup mentality to improve decision-making speed and streamline operations [14][15] AI and Cloud Computing Focus - Alibaba has positioned itself as a leader in AI, launching its first AI model, Tongyi Qianwen, in 2023 and making its models open source [24][25] - The company plans to invest over 50 billion in AI infrastructure over the next three years, indicating a strong commitment to AI development [22] - Alibaba's cloud computing business is expected to benefit from the growing demand for AI applications, as it provides the necessary infrastructure for running these models [30][31] Market Position and Future Outlook - The narrative around Alibaba is shifting from a struggling e-commerce company to a significant player in cloud and AI, presenting new growth opportunities [32] - The company's stock rally is partly driven by investor enthusiasm for AI technology and its potential impact on Alibaba's cloud business [23][29]