Alibaba Shares Surge as New Fiscal Year Begins

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Alibaba Group has opened the 2026 trading year with significant momentum, posting strong gains across multiple exchanges. The advance is fueled by positive internal developments, notably from its retail subsidiary Hema Fresh, and a broader resurgence of investor confidence in China's technology sector.

The company's stock listed in Hong Kong surged 4.34% during the session, making it a key contributor to the Hang Seng Index's 2.8% climb. The bullish sentiment extended to European trading, where shares advanced 2.52% to reach €130.20 by mid-session.

This positive start follows an impressive recovery phase throughout 2025, during which Alibaba's share price appreciated by more than 72%. This rebound marks a significant turnaround from a prolonged period of regulatory pressures and corporate restructuring.

Strategic Divisions Driving Optimism

A primary catalyst for the recent uptick is a newly announced target for the Hema Fresh (Freshippo) grocery chain. According to financial media reports, the division aims to achieve a Gross Merchandise Volume (GMV) exceeding RMB 100 billion (approximately USD 13.8 billion) for fiscal year 2026. This objective is viewed as a critical component of Alibaba's strategy to integrate online and offline commerce more deeply and is interpreted as a signal of resilient consumer demand in China despite broader economic headwinds.

Concurrently, the company's strategic pivot toward artificial intelligence is bearing fruit. Its suite of open-source AI models, known as Qwen, has reportedly surpassed 600 million downloads, positioning Alibaba as a leading force in China's generative AI landscape. This technological foundation is increasingly translating into financial performance, with the Cloud business unit recently reporting a year-over-year revenue acceleration of approximately 34%. This growth indicates a progressing commercialization phase for its AI-powered cloud services.

Sector-Wide Tailwinds and Valuation

The rally was further supported by positive sector news. Shares of Baidu jumped over 9% following reports that its AI chip unit, Kunlunxin, had confidentially filed for a Hong Kong IPO. This development revitalized risk appetite for Chinese tech stocks broadly, with Tencent also gaining around 4%. Alibaba benefited clearly from this improved market environment.

From a valuation perspective, the stock remains priced relatively moderately despite its rally. With a price-to-earnings (P/E) ratio of about 18.6, it trades below valuation levels seen in previous boom periods. This suggests that the full earnings potential from its AI and cloud businesses may not yet be fully reflected in the share price.

Forward-Looking Indicators

Investors are now focused on whether the current upward trend can be sustained through the period surrounding the Chinese New Year. A key metric in upcoming quarterly reports will be the actual GMV delivered by Hema Fresh and the feasibility of its ambitious RMB 100 billion-plus target.

From a technical analysis perspective, the stock's breakout above year-end resistance levels on high trading volume is considered a clearly positive signal. On the fundamental side, the consensus view among analysts, as aggregated by TipRanks, points to a potential upside of roughly 40% over the next twelve months. Realizing this potential is seen as contingent upon the successful monetization of AI investments within the cloud and platform businesses, coupled with a continued recovery in domestic Chinese consumption.