Alibaba Group Holding Ltd. (NYSE:BABA) stock surged nearly 12% in premarket trading Wednesday as improving earnings expectations, artificial intelligence optimism, and several company developments boosted investor sentiment.
The rally followed reports that Alibaba provided analysts with a positive business update ahead of earnings. The company said losses in its instant-commerce business narrowed during the June quarter while overall profitability remained stable, Bloomberg reported Wednesday, citing Chinese media outlet Jiemian.
Jefferies Sees Stronger Execution
Alibaba shares have fallen more than 33% year to date as investors worried about China’s slowing economy and questioned how quickly the company could monetize its AI investments.
However, Jefferies Hong Kong analyst Thomas Chong believes much of that pessimism is already reflected in the stock price.
According to Bloomberg, Chong expects Alibaba to deliver solid execution in the June quarter. He also expects AliCloud to post faster year-over-year growth, supported by rising demand for AI services.
Anthropic Ban And Court Win Draw Attention
Alibaba also remained in focus after two major developments.
CNBC reported that Alibaba instructed employees to stop using Anthropic’s AI products, effective July 10. The company classified Anthropic’s Claude Code as high-risk software and asked employees to uninstall Anthropic models and agent products. Employees were directed to use Alibaba’s in-house AI assistant, Qoder, instead.
The move followed Anthropic’s allegation that Alibaba attempted to distill its AI capabilities.
Separately, Bloomberg reported that Alibaba secured temporary relief in its legal challenge against a Pentagon lobbying restriction. U.S. District Judge Eumi K. Lee temporarily blocked the Defense Department from treating Alibaba as a military-linked company under the lobbying ban while the court reviews the case.
Earnings Remain The Next Key Catalyst
Investors are now looking ahead to Alibaba’s estimated Aug. 28, 2026, earnings report.
Wall Street expects earnings per share of $2.51, up from $2.06 a year earlier. Revenue is projected to reach $38.72 billion, compared with $34.57 billion in the prior-year quarter.
The stock trades at about 15.2 times earnings, suggesting a valuation that is broadly in line with peers.
ETF Exposure Could Influence Trading
Alibaba is also a meaningful holding in several exchange-traded funds, including the Avantis Emerging Markets Equity ETF (NYSE:AVEM), the Avantis Responsible Emerging Markets Equity ETF (NYSE:AVSE), and the SPDR NYSE Technology ETF (NYSE:XNTK).
As a result, significant fund inflows or outflows could lead to automatic buying or selling of Alibaba shares.
Price Action
BABA Stock Price Activity: Alibaba shares were up 11.34% at $109.27 during premarket trading on Wednesday, according to Benzinga Pro data.
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