In Ali Baba and the Forty Thieves, a folk tale included to the One Thousand and One Nights collection of Arabic stories, the magical words "Khul ja sim sim", or ”Open, Sesame”, had the power to open the mouth of a cave containing a hidden and unbelievable riches inside. Now it seems that the AI-word has its own modern magic as a secret password to unlock a trove of resuming Alibaba stock rally. The Chinese-rooted e-commerce giant confirmed its plans for major AI investment at the moment when last quarter's revenue showed a solid rebound.

This was enough for Alibaba stock soaring by another 15% in the past week alone. Getting too close to the next symbolic landmark of $150 per piece on weekly charts made it possible to turn a mostly bullish sentiment to an immediate corrective step back of over 10% already in the very first hour of this Monday's regular trading for Alibaba's ADR after the opening bell on Wall Street. This warning sign is intended to remind the crowd of positive-minded investors of the former Alibaba stock movement, which has been actually stifled in early autumn 2024 after a two-week spike, not destined to reach $120. That time, Alibaba prices returned deep to the bottom around $80 before finding the strength to rise again only in the beginning of 2025. BABA has risen more than 60% since the recent Christmas time.

5 months ago I wrote that Chinese markets took heart, but this turned out to be a “premature truth”. And here is a lesson I need to learn so as not to set myself far-reaching goals to be celebrated too soon. However, I would not question the concept of a further step-by-step climbing for Alibaba shares, based on a rather successful response on its management's global claims and keeping in mind a great free space up to above $300, since this target perfectly corresponds to the peak values of 2020. Goals around $200 could come first, but approaching these kinds of distant targets may not happen in nearest months, or even this year, as proper pullbacks up to $115-$120 or so may occur on the way, which makes new purchases reasonable either with a corresponding retest of these lower levels, or with a clear breakthrough above a $150 resistance by any week's closing.

As to the world of correct words and numbers, "this quarter's results demonstrated substantial progress in our "user first, AI-driven" strategies and the re-accelerated growth of our core businesses," said Eddie Wu, CEO of Alibaba Group, after his company's sales rose 8% YoY in Chinese Yuans to RMB 280.15 billion, even slightly beating Wall Street pool estimates of RMB 277.03 billion. Alibaba's core businesses are Taobao and Tmall Group, which are directed to Chinese native customers and to Alibaba's clients abroad. Cutting prices in time and intensifying promotional offers was cited among factors, which allowed to revitalise consumer spending.

Just to offer you some more dry figures, the company's Cloud Intelligence group revenue grew by 13% YoY to RMB 31.74 billion, and so this AI-related product is maintaining its strong growth for the sixth straight quarter in a row which gives much of the current inspiration in the market. As an example, the facts that the company's cloud business was "much stronger than the Street" and its AI strategy "is heading into its next gear of growth" could deliver "an inflection point" to make Alibaba one of the winners "in the China AI Arms Race", according to Wedbush Securities. Again, Alibaba's international digital commerce segment surged 32% YoY to RMB 37.76 billion ($5.17 billion), hinting that cross-border business is striving for higher speeds.

Focus areas for further investing into AI may now include the sector implications of post-DeepSeek effective tools. As Alibaba CEO Eddie Wu mentioned, aiming to develop models that extend the boundaries of intelligence. He characterised the AI revolution as "the kind of opportunity for industry transformation that only comes around only once every few decades", and so that the company would invest more in AI and cloud computing "over the next three years than it had in the past decade", without a particular investment amount.

In contrast to the years of an alleged excommunication, the clear participation of Alibaba's co-founder Jack Ma in a meeting of enterprise leaders chaired by China's President Xi Jinping in February, as well as broadcasted pictures of Jack Ma shaking hands with the all-mighty Xi, also raised investor confidence in Alibaba. In the current wave of business stimulation in China, proximity to the ruling Communist Party matters, no less than to know by heart an "Open, Sesame" password.