Alibaba stock surged 12% on May 13, 2026, as investors embraced the company’s bullish outlook on artificial intelligence despite a sharp drop in near-term profitability. The jump marked the largest single-day gain for baba stock since the company climbed 32% in September 2025, signaling renewed confidence in the e-commerce and cloud-computing giant’s AI-driven transformation.
The Chinese tech company reported fiscal fourth-quarter results showing cloud revenue accelerating 38% year-over-year, driven by surging demand for AI services. AI-related products now account for 30% of Alibaba’s external cloud revenue, according to the company’s earnings announcement, with an annualized run rate approaching $5.2 billion.
The earnings picture was mixed. While revenue rose 3% to $35.28 billion, adjusted earnings before interest, taxes, and amortization (EBITA) for the core business fell roughly 84% year-over-year as Alibaba poured capital into AI infrastructure and cloud expansion. Net income for the full fiscal year 2026 dropped 62% to 60.7 billion yuan ($8.79 billion). Yet the market focused on the long-term opportunity: the company’s cloud unit’s adjusted EBITA reached $550 million, up 57%, signaling improving unit economics even amid heavy investment.
Alibaba’s shift mirrors a broader pattern in the tech industry where companies sacrifice near-term profits to capture AI market share. When comparable earnings events have shown strong cloud and AI growth offsetting profit declines, markets have historically rewarded the forward-looking bet. In September 2025, Alibaba’s own 32% monthly surge came after the company announced plans to boost AI spending significantly, demonstrating investor appetite for AI-focused capital allocation.
The cloud unit’s external customer base grew 40%, and AI models now deliver triple-digit growth rates in some segments, according to company disclosures. Alibaba projects that annual recurring revenue from AI models and services will reach 30 billion yuan ($4.4 billion) by year-end, tripling from current levels. These metrics underscore why the stock market rewarded the earnings miss with a sharp rally—the AI inflection point many analysts expected appears to be arriving.
Sources
- CNBC — reported on May 13, 2026 that Alibaba shares jumped on cloud computing revenue growing 38% driven by AI demand, despite core profit plunging 84%
- Reuters — confirmed on May 13, 2026 that cloud revenue rose 38%, AI products touched 30% of external cloud revenue, and the company posted a 3% revenue rise
- Business Wire — reported Alibaba’s fiscal year 2026 non-GAAP net income decreased 62% to RMB60.658 billion on May 13, 2026
- LinkedIn (Alibaba Group official) — stated cloud revenue up 38%, external cloud accelerating to 40%, and AI-related products accounting for 30% of cloud revenue
- The Motley Fool — confirmed Alibaba stock climbed 32% in September 2025 driven by AI tailwinds
- Seeking Alpha — reported on May 14, 2026 that cloud intelligence revenues accelerated 38% year-over-year and external customer growth reached 40%
- Quartz — reported on May 13, 2026 that cloud revenue rose 38% on AI demand while adjusted net income was just $12 million
