Alibaba (BABA) stock is surging Thursday after the Chinese technology powerhouse beat top- and bottom-line expectations for its fourth quarter.
In the three months ending December 31, Alibaba's revenue increased 7.6% year over year to 280.2 billion yuan. Net profit rose 12.8% from the year-ago period to 21.39 yuan per share.
"This quarter's results demonstrated substantial progress in our 'user first, AI-driven' strategies and the re-accelerated growth of our core businesses," said Alibaba CEO Eddie Wu in a statement.
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The CEO noted that customer management revenue (CMR) at Taobao and Tmall Group grew 9% on new initiatives to enhance user experience as well as effective monetization.
Wu also said revenue in Alibaba's Cloud Intelligence Group increased 13.1% year over year to 31.8 billion yuan, highlighted by triple-digit year-over-year growth in AI-related product revenue for a sixth consecutive quarter.
The results beat analysts' expectations. Wall Street was anticipating revenue of 278.5 billion yuan and earnings of 19.47 yuan per share, according to Investor’s Business Daily.
"Looking ahead, revenue growth at Cloud Intelligence Group driven by AI will continue to accelerate," Wu said.
Alibaba "will continue to execute against our strategic priorities in e-commerce and cloud computing," Wu added, "including further investment to drive long-term growth."
Alibaba to bring AI to the iPhone in China
Last week, Alibaba announced a partnership with Apple (AAPL) to bring its AI solutions to the iPhone in China, according to CNBC.
″[Apple] talked to a number of companies in China, and in the end, they chose to do business with us," Alibaba Chairman Joe Tsai said. "They want to use our AI to power their phones."
Wu did not address the deal with Apple in his commentary on Alibaba's earnings.
Is Alibaba stock a buy, sell or hold?
Often referred to as the "Amazon.com (AMZN) of China," BABA stock is up nearly 50% already in 2025, outperforming the S&P 500 by more than 10 times. BABA soared in late January after the company introduced a new AI model it says outperforms DeepSeek and other competitors. Wall Street remains upbeat on the Chinese tech stock, though the share price has zoomed past analysts' 12-month price targets.
According to S&P Global Market Intelligence, the consensus recommendation among the analysts following the stock that it tracks is a Buy, with an average 12-month price target price of $122.82.
Financial services firm Susquehanna International Group reiterated its Positive rating (equivalent to a Buy) and maintained its $130 12-month price on BABA stock following the earnings release.
"BABA reported a fiscal year third-quarter with the overall top line 1% above consensus," noted senior analyst Shyam Patil after the earnings release but before Alibaba's conference call. Patil added that overall CMR was 6% above Susquehanna's forecast.
"International Commerce was 5% above on the top line and Cloud was 3% ahead," Patil said, "but Cainiao was 9% below consensus and Local Services was 16% below."
Though Alibaba did not provide guidance in its release, management "may share more color on the outlook on the call."
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