A renewed wave of institutional interest is building around Chinese e-commerce giant Alibaba. While geopolitical tensions persist, the company’s accelerating cloud revenue and strategic investments in artificial intelligence and logistics are drawing attention from major funds and analysts.
Surging Cloud Revenue and Attractive Valuation
The company’s Cloud Intelligence Group has become a central pillar of its investment thesis. Second-quarter revenue for the division surged 34% year-over-year, a jump primarily fueled by AI-related products, which themselves are experiencing triple-digit growth rates. Despite a recent dip in overall profit attributed to heavy investment in its quick-commerce delivery network, many market observers find the stock’s valuation compelling. Shares currently trade at approximately 20 times expected earnings for the coming year—a level considered reasonable compared to other major cloud service providers.
This optimism was reflected in recent analyst actions. On December 19, an analyst on Seeking Alpha upgraded their rating to “Strong Buy,” explicitly citing the robust fundamentals of the cloud segment. That same day, the CNBC “Halftime Report” Investment Committee included Alibaba in its “Final Trades” segment.
Strategic Moves in Logistics and AI Integration
Beyond cloud computing, Alibaba is aggressively expanding its logistics capabilities. Its subsidiary Cainiao and online supermarket platform Tmall are deepening their collaboration to extend a “Half-Day Delivery” network. The initiative aims to achieve delivery windows as short as four hours in select regions, a competitive response to intensifying rivalry in the rapid-delivery sector.
Concurrently, the company is weaving AI deeper into its ecosystem. It has fully integrated its proprietary large language model, Qwen, into its mapping service, Amap. This marks the first complete integration of a group service with the AI model, underscoring Alibaba’s commitment to embedding artificial intelligence across its platforms. Further reports from December 10 indicate the company’s interest in acquiring Nvidia’s H200 chips, though regulatory obstacles remain.
Should investors sell immediately? Or is it worth buying Alibaba?
Major Funds Increase Their Stakes
Several prominent investment firms have recently enlarged their positions in Alibaba. Harbour Capital Advisors established a new position in the third quarter of 2025, purchasing 6,900 shares valued at approximately $1.25 million. Temasek increased its holding by 23.4% to 5.51 million shares, while Causeway Capital boosted its stake by 42.6%. In aggregate, institutional investors now hold about 13.47% of the company’s outstanding shares.
This financial vote of confidence exists alongside ongoing political headwinds. Also on December 19, U.S. lawmakers urged the Department of Defense to classify Alibaba as a potential national security risk. Such geopolitical factors continue to weigh on the stock’s risk profile.
Options Activity Reflects Cautious Sentiment
Trading in the options market on December 19 presented a mixed picture, with over 208,000 contracts changing hands. Put options slightly outnumbered call options, comprising 52.09% of the volume versus 47.91% for calls. Notable activity centered on put options with a $200 strike price expiring in January 2026, suggesting some market participants are hedging against volatility or speculating on a potential price ceiling.
The stock is currently trading between its 50-day moving average of $162.32 and its 200-day moving average of $137.14. The coming weeks will reveal whether the operational momentum in its cloud and AI businesses can sufficiently outweigh the persistent political uncertainties.
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