Core Viewpoint - Alibaba's recent financial report showed disappointing revenue and profit figures, yet the stock surged by 12.9%, indicating that the market is more focused on future potential rather than past performance [2][4]. Group 1: Reasons for Alibaba's Stock Surge - **Victory in Subsidy War**: Alibaba, along with competitors like Meituan, has been engaged in aggressive subsidy battles. While Meituan's profits plummeted by 98% to only 230 million, Alibaba managed to leverage its dual business model of food delivery and e-commerce to gain market share and increase monthly active users by 25% [5][7][9]. - **International E-commerce Approaching Break-even**: Alibaba's international e-commerce business has reached a point of near profitability, which is crucial for its long-term growth strategy. This move is essential for any major Chinese tech company aiming for a market cap of one trillion USD [10][12]. - **Rapid Growth in Cloud AI Business**: Alibaba Cloud's revenue grew by 26% year-on-year, with AI-related income increasing for eight consecutive quarters, now accounting for 20% of cloud revenue. This indicates a significant shift towards scalable AI solutions [12][14]. - **Development of New AI Chip**: Alibaba's semiconductor division, "Pingtouge," is reportedly developing a new AI chip that could achieve 90% of Nvidia's H20 performance while consuming 15% less energy. This development aims to reduce reliance on foreign chips and could significantly boost market confidence [14][15]. Group 2: Competitive Landscape - **Meituan's Decline**: Meituan's lack of a competitive moat in the food delivery sector has led to its profit evaporating due to price wars. Unlike Alibaba, which can recover through its e-commerce segment, Meituan is left vulnerable [17]. - **Nvidia's Stock Decline**: Nvidia's stock fell by 3% following concerns about the potential for self-sufficiency in China's AI chip market. This could threaten Nvidia's market position, especially given that half of the world's AI researchers are based in China [18][21]. Group 3: Strategic Insights - **Importance of Clear Strategy**: Alibaba's recent success is attributed to a clear strategic focus established after the return of its founder. The company is concentrating on becoming a comprehensive consumer platform and enhancing its AI and cloud capabilities [22][24]. - **Market Dynamics**: The capital market prioritizes future potential over past performance. Alibaba's clear strategy and growth prospects led to its stock increase, while Meituan's uncertain future resulted in a stock decline. Nvidia faces pressure due to emerging competition in the chip sector [24].