The Motley Fool·2025-12-08 20:15Core Viewpoint - Alibaba Group is experiencing a turnaround, with improving investor sentiment and early signs of strategic progress after years of regulatory challenges and competition [1][2]. Group 1: Cloud and AI Momentum - Alibaba's cloud revenue grew 34% year over year to RMB 39.8 billion ($5.6 billion) in the September 2025 quarter, marking a strong performance [5]. - AI-related revenue has been growing at triple-digit rates for nine consecutive quarters, solidifying Alibaba's position in China's AI cloud market with a 36% market share [5][6]. - The shift in AI workloads is driving higher revenue per customer and stronger margins, positioning cloud and AI as active growth engines rather than future optionality [7]. Group 2: E-commerce Performance - Alibaba's commerce revenue grew 16% year over year, driven by the expansion of its quick commerce business and increased take rates [10]. - The company is now operating from a steadier base, allowing cloud and AI to become primary growth drivers without being hindered by the commerce segment [11]. Group 3: Sentiment Toward Chinese Tech - Regulatory uncertainty and geopolitical risks previously impacted sentiment, but recent developments indicate a stabilization in the regulatory environment [12][13]. - The return of institutional investors, such as ARK Invest purchasing Alibaba shares, signals a renewed interest in the stock [14][15]. - Analysts are providing more constructive updates, suggesting that Alibaba is becoming more investable [15]. Group 4: Implications for Investors - Alibaba is showing convincing traction in AI and cloud, an improving regulatory backdrop, and a stabilizing e-commerce foundation, which could lead to a multiyear rerating if trends continue [17][18].