By Tracy Qu

Shares of Alibaba Group surged as investors remained upbeat on the company's cloud and artificial intelligence business.

Its Hong-Kong listed stocks were 5.05% higher at HK$139.20, equivalent to US$17.78, after its ADRs gained 8.2% overnight, outperforming Hang Seng Tech index's 0.3% gain.

While AI investment has pressured Alibaba's profitability, management noted in a post-earnings call that the expected return on investment over the next three to five years remains "extremely clear."

"I can tell you that today, there isn't a single card on our service that is idle," said Chief Executive Eddie Wu.

Alibaba's cloud unit met all key assessment metrics, Morgan Stanley analysts said, adding that they expect cloud revenue to grow 42% in the fiscal first quarter and 45% for fiscal year 2027.

Losses in its "all others" category--which cover Qwen consumer business unit and other businesses --have emerged as a concern, primarily due to model training costs and costs for the consumer-facing AI app Qwen. Morgan Stanley expects these losses to narrow in the fiscal first quarter, raising its target price for ADRs to US$190.00 from US$180.00.

Nomura was also upbeat on Alibaba's outlook, citing near-term upside for cloud margin, pointing to the deployment of in-house chips and a shift toward higher-margin business. Nomura lifted its target price to US$180.00 from US$172.00. Alibaba's ADRs last closed at US$145.81.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

HSBC was upbeat on Alibaba's outlook, citing near-term upside for cloud margin, pointing to the deployment of in-house chips and a shift toward higher-margin business. HSBC lifted its target price to US$180.00 from US$172.00. "Alibaba Shares Rise Amid Optimism on AI, Cloud Businesses," at 04:12 GMT, incorrectly cited Nomura instead.

(END) Dow Jones Newswires

May 14, 2026 05:14 ET (09:14 GMT)

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