By Ion Jauregui – Analyst at ActivTrades
In short, Alibaba is expanding its cloud business, launching an AI chip, and regaining ground in e-commerce. Alibaba Group Holding Ltd. (NYSE: BABA) surged 19% on Monday in Hong Kong, its biggest jump since March, following the release of earnings that reinforced perceptions of a positive shift in its operational performance.
Fundamental momentum
The company reported revenues of 247.65 billion yuan ($34.73 billion), slightly below market expectations. However, the standout figure was a 78% increase in net profit, restoring investor confidence.
The main driver was the cloud computing division, which grew 26% year-on-year, benefiting from the boom in artificial intelligence. Additionally, Alibaba is developing its own AI chip, aiming to reduce technological dependence on external suppliers and strengthen its position in a strategic sector against global competitors.
At the same time, its traditional e-commerce business shows signs of recovery. Taobao has introduced a one-hour express delivery model, designed to enhance the customer experience and directly challenge rivals such as JD.com and PDD Holdings.
Strategic context
This rebound comes after years of uncertainty linked to Chinese regulatory measures and the impact of international tariffs. The latest results suggest that Alibaba may be overcoming this phase, supported by technological diversification and operational efficiency.
Technical analysis
In yesterday’s session, Alibaba closed at $138.88, consolidating the upside gap from August 28, which marked the breakout of the consolidation range between $116 and $134 that had been in place since April. This breakout has pushed the price toward the resistance level at $141.34, just below the annual high of $145.98 reached in March.
The move has technical backing: the stock is trading above its 50-day moving average, reinforcing the validity of the bullish breakout. Still, several indicators call for caution. The RSI at 77.59 signals overbought conditions, while the MACD, although still in positive territory, shows a contracting histogram—hinting at the likelihood of a technical pullback and the emergence of a new consolidation zone.
If such a correction occurs, the price could retrace toward the $132–133 range, a key level that would act as a consolidation test before any renewed upward momentum. Below that, the first major support lies at $127.93; if this is breached due to weakening bullish strength, selling pressure could extend toward the point of control (POC) around $117, signaling a deeper retracement within the market structure.
In the short term, buying appetite remains strong, though sentiment indicators—such as the ActivTrades US Market Pulse—show a shift from a “Risk On” to a “Risk Off” environment. This change could trigger selling in large-cap tech stocks, whose valuations remain exposed to risks tied to the ongoing AI bubble.
Cloud business remains in the bubble
Alibaba is back on investors’ radar thanks to the strength of its cloud division and the growth potential of artificial intelligence as a key catalyst. While regulatory pressure and fierce domestic competition remain risk factors, the technical rebound and improving margins reinforce the perception that the Chinese giant is entering a phase of sustained recovery.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success.
In short, Alibaba is expanding its cloud business, launching an AI chip, and regaining ground in e-commerce. Alibaba Group Holding Ltd. (NYSE: BABA) surged 19% on Monday in Hong Kong, its biggest jump since March, following the release of earnings that reinforced perceptions of a positive shift in its operational performance.
Fundamental momentum
The company reported revenues of 247.65 billion yuan ($34.73 billion), slightly below market expectations. However, the standout figure was a 78% increase in net profit, restoring investor confidence.
The main driver was the cloud computing division, which grew 26% year-on-year, benefiting from the boom in artificial intelligence. Additionally, Alibaba is developing its own AI chip, aiming to reduce technological dependence on external suppliers and strengthen its position in a strategic sector against global competitors.
At the same time, its traditional e-commerce business shows signs of recovery. Taobao has introduced a one-hour express delivery model, designed to enhance the customer experience and directly challenge rivals such as JD.com and PDD Holdings.
Strategic context
This rebound comes after years of uncertainty linked to Chinese regulatory measures and the impact of international tariffs. The latest results suggest that Alibaba may be overcoming this phase, supported by technological diversification and operational efficiency.
Technical analysis
In yesterday’s session, Alibaba closed at $138.88, consolidating the upside gap from August 28, which marked the breakout of the consolidation range between $116 and $134 that had been in place since April. This breakout has pushed the price toward the resistance level at $141.34, just below the annual high of $145.98 reached in March.
The move has technical backing: the stock is trading above its 50-day moving average, reinforcing the validity of the bullish breakout. Still, several indicators call for caution. The RSI at 77.59 signals overbought conditions, while the MACD, although still in positive territory, shows a contracting histogram—hinting at the likelihood of a technical pullback and the emergence of a new consolidation zone.
If such a correction occurs, the price could retrace toward the $132–133 range, a key level that would act as a consolidation test before any renewed upward momentum. Below that, the first major support lies at $127.93; if this is breached due to weakening bullish strength, selling pressure could extend toward the point of control (POC) around $117, signaling a deeper retracement within the market structure.
In the short term, buying appetite remains strong, though sentiment indicators—such as the ActivTrades US Market Pulse—show a shift from a “Risk On” to a “Risk Off” environment. This change could trigger selling in large-cap tech stocks, whose valuations remain exposed to risks tied to the ongoing AI bubble.
Cloud business remains in the bubble
Alibaba is back on investors’ radar thanks to the strength of its cloud division and the growth potential of artificial intelligence as a key catalyst. While regulatory pressure and fierce domestic competition remain risk factors, the technical rebound and improving margins reinforce the perception that the Chinese giant is entering a phase of sustained recovery.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance and forecasting are not a synonym of a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Political risk is unpredictable. Central bank actions can vary. Platform tools do not guarantee success.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.