The rally came as investors rotated into Chinese technology stocks after a sell-off in global semiconductor shares. Despite the rebound, Alibaba stock is still down roughly 33% this year as the company faces weaker earnings expectations.
Alibaba Stock Jumps
Alibaba stock surged on Wednesday, and recorded its strongest single-day gain in 10 months. This happened after investors rotated into Chinese technology companies following a sharp sell-off in global semiconductor stocks. Alibaba shares climbed more than 12% in Hong Kong, while the company's US-listed ADRs rose around 10% in premarket trading.
Alibaba stock price over the past day (Source: Google Finance)
The rally extended across China's technology sector, with Xiaomi, Lenovo, and Baidu all posting gains of around 7% to 9%. The optimism also lifted the KraneShares CSI China Internet ETF, thanks to the renewed investor interest in Chinese internet stocks.
The rebound came after global chip stocks experienced heavy losses. The PHLX Semiconductor Index fell 5% on Tuesday, which left it roughly 15% below its recent peak, while South Korea's Kospi index entered bear market territory as major chipmakers Samsung Electronics and SK Hynix declined after months of strong performance.
Despite Wednesday's rally, Alibaba stock is still under pressure for the year, with its US-listed shares still down approximately 33% in 2026. Analysts have also lowered their long-term earnings expectations, reducing fiscal 2027 earnings forecasts from $10.35 per share last year to about $6.29 per share.
The weaker outlook is part of Alibaba's growing investment in artificial intelligence and cloud infrastructure, including development of its Qwen large language model. At the same time, the company's core e-commerce business faces challenges from subdued consumer spending in China, which has weighed on revenue growth and investor sentiment.
