Alibaba's shares have surged more than 120% year-to-date on renewed enthusiasm around artificial intelligence, and fund managers say the rally may not be over yet. The rebound—driven by investor interest in Alibaba's AI investments—has revived shares that still trade more than 65% below their five-year peak, when a single share exceeded $300. Managers point to continued upside as global funds remain underweight the name. 

Valuation and ownership data provide nuance: Alibaba trades in Hong Kong at roughly 22× forward earnings, about double its three‑year average but largely in line with the Hang Seng tech index. Onshore investors have increased holdings to 11% of shares as of Sept. 30 (from 8.6% a month earlier), while international funds remained underweight by 1.3% versus the MSCI China index at end‑August. Alibaba Cloud posted a 26% year‑on‑year revenue rise in Q2. 

Executives and managers also highlighted AI spending as a key variable. CEO Eddie Wu said the company will expand a previously announced three‑year AI budget of $53 billion but did not disclose a revised figure. Jian Shi Cortesi of Gam Investment Management said he expects underweights to reverse and that sentiment could be driven by FOMO after the strong run. Richard Clode of Janus Henderson noted investors may feel comfortable entering Alibaba given its relative valuation, while Aberdeen’s Bush Chu said sustained AI capability and profit growth would attract global investors, though Alibaba may need higher investment to serve global clients. #Alibaba #AI #Investing #China #FiatNews