The frenzy over Chinese artificial intelligence is turning Alibaba Group Holding Ltd. into an investor favorite again, injecting new life into an e-commerce giant that had nearly sunk into obscurity following a years-long regulatory crackdown.
Reuters
Alibaba’s Hong Kong-listed shares have surged 46% since hitting a 2025 low on January 13, expanding its market value by nearly $87 billion and exceeding the Hang Seng Tech Index’s 25% gain in the same period. That makes the stock by far the best performer in China’s Big Tech universe in the new year, outshining rivals Tencent Holdings Ltd., Baidu Inc. and JD.com Inc.
It marks a surprise reversal of fortunes for Alibaba, which had fallen out of favor among investors after its business suffered from Beijing’s clampdown on the country’s tech behemoths and a post-Covid consumption slump. Behind the rally is optimism about Alibaba’s efforts to develop its own AI services and platform, which gained traction after Chinese AI startup DeepSeek unveiled technologies that caused a rout on Wall Street.
Alibaba’s shares got another shot in the arm on Wednesday, after the Information reported that Apple Inc. is working with the e-commerce pioneer to roll out AI features in China.
“The emergence of DeepSeek has sparked a new AI-related catalyst for Chinese tech stocks,” said Andy Wong, investment and ESG director for Asia Pacific at Solomons Group. “Within this space, we see Alibaba as having more tangible and well-established earnings growth prospects in the medium term.”
Alibaba’s 2025 bounceback is the culmination of a year-long turnaround spearheaded by two of Jack Ma’s oldest lieutenants: Joe Tsai and Eddie Wu. The chairman and CEO, part of the original founding team that created Taobao in Ma’s lakeside apartment, took the helm in 2023 right after years of Beijing-led regulatory investigations and a post-Covid downturn gutted its cloud and consumer businesses. They took the company back to basics, initially focusing on consolidating and streamlining the fragmented core commerce business.
They also decided to go big in AI. Since the advent of ChatGPT, Alibaba has invested in a clutch of China’s most promising startups, including Moonshot and Zhipu. And it prioritized the expansion of the cloud business that underpins AI development, slashing prices to win back the customers that fled to rivals during the turbulent years. It also decided to spend on AI, joining a race led by Baidu at the time.
In January, that effort yielded initial fruit. Alibaba published benchmark scores showing its Qwen 2.5 Max edition scored better than Meta Platforms Inc.’s Llama and DeepSeek’s V3 model in various tests. The company is now considered a leading player in AI alongside big names from Tencent to ByteDance Ltd. and startups including Minimax and Zhipu.
A key hurdle facing Chinese AI firms has been the slower adoption and lack of willingness to pay for services among domestic consumers and businesses. “Many hedge funds and long-only investors see AI as a potential inflection point for Alibaba, with some expressing interest in understanding the valuation of Alibaba’s cloud business and any upside from large language models,” JPMorgan Chase & Co. analysts including Alex Yao wrote in a note. “The AI narrative is seen as a driver for potential re-rating, but there are concerns about the monetization of AI capabilities.”
In addition, cloud business growth for Chinese hyperscalers has lagged that of major US peers so far. Analysts estimate cloud revenues for the December quarter rose 9.7% from a year ago at Alibaba and 7.7% at Baidu, compared with 19% at Amazon.com Inc. and 31% at Microsoft Corp.
Alibaba’s financial results scheduled next Thursday are expected to offer investors a fresh opportunity to learn about the company’s progress on its AI models and outlook for its cloud services.
Despite the lingering question marks, Alibaba’s valuations remain attractive to some investors even after the latest rally. Its shares are trading at 12.2 times forward earnings, below its five-year average of 14.6 times.
“Despite the rally, Alibaba’s stock is still undervalued compared to its US tech peers, considering its growth potential and market position,” said Manish Bhargava, chief executive officer at Straits Investment Management in Singapore. “The company is expanding its overseas marketplaces, which could reduce its reliance on the domestic Chinese market and drive future growth.”
Eyewear maker EssilorLuxottica said on Wednesday its adjusted operating profit rose 9.4% last year, to 4.4 billion euros ($4.6 billion), broadly in line with analysts’ expectations.
Ray-Ban
Revenues at the group, whose brands include Ray-Ban, rose 9.2% at constant exchange rates in the fourth quarter, accelerating compared the third quarter and bringing the total revenues for the year to 26.5 billion euros, a touch above a 26.4 billion euros analysts forecast according to LSEG data.
“We celebrate… our fourth consecutive year of top line growth on track with our targets including a strong acceleration in the fourth quarter, with all regions and businesses contributing to our momentum,” said Francesco Milleri, Chairman and CEO, and Paul du Saillant, Deputy CEO.
The managers added that the Franco-Italian group remains on track with its long-term targets.
The company confirmed its target of mid-single-digit annual revenue growth from 2022 to 2026 at constant exchange rates, noting it targets a range of 27-28 billion euros by the end of the period.
It also confirmed it expects to achieve an adjusted operating profit equal to 19-20% of revenues by 2026, from 17% at the end of last year.
Although the company still generates most of its revenues from the sale of frames and lenses, it is looking to expand into new sectors such as medical and high-tech.
The group said that it had sold 2 million units of Ray-Ban Meta smartglasses since their launch, with a strong acceleration in 2024.
Fast fashion retailer Shein has abandoned plans to open a UK warehouse as doubts gather over its planned listing on the London Stock Exchange this year.
Reuters
The China-founded digital retailer has ended a search for space in the Midlands and confirmed there were now “no plans” to open a warehouse in Britain, The Daily Telegraph reported.
Shein representative had been viewing potential warehouses across the East Midlands, including Derby, Daventry, Coventry and Castle Donington, with the company believed to have been considering sites as large as 600,000 sq ft.
The search underpinned Shein’s plan for a £50 billion float in London in the first half of this year, in what would be one of the UK’s largest listings. However, that listing’s now in the balance after a threatened crackdown on Shein’s business model in Europe and the US, and amid criticism from MPs about the lack of transparency around its supply chain, the report said.
Yet the connection to recent developments may be an illusion. Insiders told the newspaper that the decision to pause the warehouse search had been made in the middle of last year and said it was part of a broader review into how much warehouse capacity Shein needed in Europe.
A spokesman for Shein said: “To support the growth of the business, Shein constantly explores warehousing locations worldwide. However, as Shein has no immediate need for a warehouse in the UK, there are no plans to have one.”
More recent setbacks for the business include Donald Trump’s move to close tax loopholes, central to the fashion company’s business model. The US president said he would remove the de minimis exemption for small packages worth less than $800 (£645) from China, although later suggested these plans had been delayed until proper systems are in place to process packages.
Last week, reports also suggested Shein was preparing to cut its valuation to around £40 billion, from an earlier £50 billion.
UK fashion retail giant Next has had one of its ads banned after complaints over its ‘unhealthily thin’ model. The Advertising Standards Authority (ASA) upheld a complaint about advert that digitally altered clothing and used low angle to accentuate her long legs.
The ad, which has been removed, ran on its website featured a model showing Next’s ‘power stretch denim leggings’. However the complaint centred on the model’s “unhealthily thin” appearance, calling Next’s marketing of the look “irresponsible”.
But Next said its aim was to market the product in a way that was “authentic and responsible” and that it used models “ranging from slim to plus size”.
The company argued the model’s proportions were “balanced”, particularly considering she was quite tall (5ft 9in/175cm), and stressed it had not digitally retouched her appearance.
However, Next did admit it had digitally altered the image of the leggings to make them look longer to “maintain focus on the product while avoiding any exaggeration of her body shape”.
In its investigation, the ASA said the model’s face did not appear to be “gaunt” and that while her arms were slim they did not “display any protruding bones”.
The body said the shot had been set up at a low angle that “accentuated the models already tall physique [and] further emphasised the slimness of the model’s legs”.
It concluded: “We concluded that the ad was irresponsible. The ad must not appear again in its current form. We told Next to ensure that the images in their ads were prepared responsibly and did not portray models as being unhealthily thin.”
Entertainment8 years ago