Alibaba shares surge 10% 🔼 Is capital coming back to China?

Alibaba ADRs listed in Europe are up nearly 10%, marking their strongest single-day gain since September 2025. The rally is being driven by growing optimism ahead of the company's upcoming earnings release, as well as a broader rotation of capital into Chinese internet stocks. Investors are increasingly seeking cheaper exposure to the AI theme following the recent surge—and the latest sharp pullback—in semiconductor stocks across the United States, South Korea, and Taiwan.

Why is Alibaba rising?

The immediate catalyst was Alibaba's pre-earnings briefing with analysts, which improved expectations for the upcoming results. Investors reacted positively to signs that losses in the highly competitive instant-commerce business narrowed during the quarter, easing concerns over margin pressure. Equally important, Alibaba appears capable of maintaining profitability while continuing to invest in high-growth businesses, including cloud computing, artificial intelligence, and digital commerce.

Alibaba's rally also reflects a broader capital rotation across Asian equity markets. After a prolonged rally in semiconductor stocks, investors have begun reducing exposure to the more expensive markets in the United States, South Korea, and Taiwan, shifting capital toward relatively undervalued Chinese megacaps. The simultaneous gains in Tencent and JD.com suggest this is not merely an Alibaba-specific story, but rather an attempt by investors to re-rate China's internet sector after a prolonged period of underperformance.

Alibaba ADR (AHLA.DE) chart

Despite today's strong rebound, Alibaba shares are still trading nearly 40% below their all-time highs, while overall sentiment toward Chinese assets remains subdued. A positive earnings surprise could reinforce the recovery and potentially lift the stock back above $100 per share.

Source: xStation5