Despite reporting plummeting profitability in its recent fiscal fourth-quarter earnings report (for the period ended March 30), Alibaba (NYSE: BABA) shares jumped as investors were excited about the Chinese company’s artificial intelligence (AI) road map.
The stock is now trading around breakeven on the year, as of this writing
Let’s dig into the company’s results and prospects to see if this is a good time to buy the stock. AI excitement While Alibaba’s AI-related product revenue saw triple-digit growth for the 11th straight quarter, it was the company’s AI chip business that got investors excited. Management said Alibaba is the only company in China capable of producing custom AI chips at scale, which gives it a big structural cost advantage.
While most often compared to Amazon in the U.S., with its own leading AI model and custom chips, Alibaba is trying to take a page out of Alphabet’s book. It’s embedded its Qwen AI model across its ecosystem and launched a range of enterprise products based on the model. Overall, Alibaba’s cloud intelligence segment revenue climbed by 38% to $6 billion.