Quick overview

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Alibaba Group Holdings’ shares listed in Hong Kong surged as much as 19 percent on Monday, triggered by the company’s better-than-expected June quarter earnings, which were driven by increased sales in its cloud computing division and a sustained rebound in its e-commerce division.

The Chinese giant listed in the US rose nearly 13 percent following the company’s earnings announcement on Friday. The company reported a 78 percent rise in net income and a 2 percent increase in revenue year over year.

Alibaba attributed the profit increase to the sale of Turkish e-commerce firm Trendyol and gains from some of its equity investments.

However, since Alibaba continues to invest in China’s highly competitive instant commerce market, its net income would have fallen 18 percent annually if investment gains had been excluded. Alibaba is demonstrating its ability to grow in China’s market by carefully balancing investments in areas like artificial intelligence and innovative e-commerce models. Alibaba’s US-listed stock has gained 40% so far this year, rewarding investors.

The company reported that division revenue was 33.4 billion yuan, up 26% from the previous year, which outpaced the 18 percent growth rate observed in the prior quarter. Similar to Google or Microsoft, Alibaba’s cloud division is considered vital to the company’s ability to profit from artificial intelligence.

According to a statement from Alibaba CEO Eddie Wu, “Cloud Intelligence Group saw accelerated revenue growth driven by strong AI demand, and AI-related product revenue is now a significant part of revenue from external customers.” Investors are focused on Alibaba’s investments in artificial intelligence, where it has become a notable global player. The company is actively selling and introducing a variety of AI models..