Shares in Alibaba (BABA) surged in Hong Kong this Monday, marking their biggest single-day jump in more than three years, after the e-commerce giant reported a 26% rise in cloud revenues for the quarter ending in June. The boost was driven by strong AI demand.
The stock rose by as much as 19%, reaching HKD137.50 (£13.04/$17.64), after the company on Friday revealed a total group revenue of CNY247.7bn (£25.6bn/$34.6bn) for the quarter, a 2% increase year-on-year, or 10% on a like-for-like basis. Net profit surged by 78% in the April-June period, driven by strong cloud computing sales and steady performance in retail.
Several major brokerages, including HSBC (HSBA.L), UBS (UBS), and Jefferies, responded by raising their target prices for Alibaba (BABA) stock to above $160.
“Alibaba is at the centre of the consumption-driven economy and online shopping, supported by its strong technological strength versus peers,” Jefferies said in a note on Friday.
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Morgan Stanley analysts also weighed in, describing Alibaba (BABA) as holding “China’s best AI enabler thesis”. They suggested that losses from its meal delivery and instant commerce operations could peak in the current quarter, while its cloud business continues to show strong growth.
The company's cloud revenue growth was one of its standout performances, climbing 26% compared to the previous year, largely fueled by increased demand for AI-driven services.
Chief executive Eddie Wu described “AI plus cloud” as one of Alibaba’s (BABA) two core growth engines, alongside e-commerce.
Shares in BYD (1211.HK) fell 6% on Monday after the Chinese electric vehicle (EV) maker reported a sharp 30% drop in quarterly profit on Friday, marking its first profit decline in over three years.
The company posted a net profit of CNY6.36bn (£659m/$891m) for the April-June period, missing analysts' expectations of CNY7-9bn. Despite the profit setback, BYD, which has overtaken Tesla (TSLA) for sales in Europe, also reported a rise in overseas sales, which helped push revenues up by 14%.
For the first half of the year, BYD's (1211.HK) net profit reached CNY15.5bn, up nearly 14% compared to the same period last year. The company’s revenue for the first six months climbed by 23% to 371.3bn yuan, buoyed by record-breaking sales of new energy vehicles (NEVs).
However, profitability took a hit due to intensifying price competition within China’s EV market. In its mid-year earnings report, BYD (1211.HK) said that “increased price competition and frequent occurrences of excessive marketing” had created significant headwinds. The company noted that these factors had “exerted an adverse periodic impact on the development of the industry”.
