To The Moon

In February 2025, a testing platform unveiled its latest blind test rankings for large language models (LLMs), with Alibaba’s newly launched Tongyi Qianwen 2.5 Max claiming the top spot among Chinese models for non-reasoning tasks. This milestone underscores Alibaba’s technological edge, even as its stock—listed as 09988:HK on the Hong Kong Stock Exchange—rose 3.36% today, February 18, 2025, closing at HKD 126.30. Trading at a price-to-earnings (P/E) ratio of 54x—within its five-year reasonable valuation range—Alibaba faces a pivotal Q4 earnings report, with analysts expecting flat adjusted net profits. Xi Jinping’s recent entrepreneurs’ symposium, attended by Jack Ma, has fueled speculation of private-sector support, but deeper economic and political risks linger. Will Alibaba’s AI-driven momentum spark a breakout, or will profit-taking prevail? This updated commentary integrates today’s stock movement, Xi’s forum, and earnings expectations.

Alibaba’s AI Edge: A Technical Triumph

Alibaba’s Tongyi Qianwen 2.5 Max topping non-reasoning tasks—such as language comprehension and text generation—cements its leadership among Chinese LLMs. Building on strengths in reasoning, coding, and mathematics, the Qwen series rivals global models like GPT-4o and DeepSeek V3. Its open-source strategy has driven over 90,000 enterprise deployments, while a recent Apple partnership for AI features in China’s iPhone ecosystem boosts its profile. Today’s 3.36% climb to HKD 126.30 reflects market enthusiasm, with posts on X calling Qwen 2.5 Max a “Chinese ChatGPT killer.” If Q4 earnings spotlight cloud revenue growth tied to AI, this momentum could be sustained.

Xi’s Symposium: A Mirage of Support

Xi Jinping’s February 17 symposium with entrepreneurs, including Jack Ma, promised “unwavering support” for private businesses. Yet, this rhetoric masks unresolved economic woes—property sector collapse, weak consumption, and U.S. trade tensions—under Xi’s unwavering ideological control. His “socialist rule of law” framework ensures private firms serve Party goals, not free markets. Alibaba’s stock jump today suggests short-term optimism, but China’s structural conflicts—debt, demographics, and demand—cap long-term upside. The symposium signals controlled enablement, not deregulation, leaving Alibaba’s domestic growth constrained.

Jack Ma and Xi: No True Rapprochement

Jack Ma’s presence at the forum has stirred talk of a thaw after his 2020 regulatory clash. However, this isn’t reconciliation—it’s utility. Xi leverages Ma’s expertise for tech ambitions, not to ease suppression. Alibaba’s history of fines and Ant Group’s IPO collapse under Xi’s watch underscores this. Today’s HKD 126.30 close—a 5% premium to U.S. ADRs—hints at a sentiment lift, but Ma’s conditional return doesn’t alter the leash. Investors banking on a “Jack Ma effect” may see gains fade if earnings disappoint.

Earnings Expectations: A Flat Reality

Analysts forecast flat Q4 adjusted net profits, reflecting e-commerce struggles amid China’s uneven recovery. Cloud computing, fueled by AI, offers hope, but it’s not yet offsetting broader softness. At 54x P/E, Alibaba’s valuation is stretched, and today’s rally to HKD 126.30—near resistance—suggests fragility if earnings falter. The February 27 earnings call will be decisive: a cloud beat and AI optimism could push shares higher, while flat results or cautious guidance might trigger a sell-off, especially post-symposium hype.

Technical Outlook: Breakout or Retreat?

Alibaba’s 3.36% gain today pushed it to HKD 126.30, surpassing HKD 125 resistance and eyeing HKD 130—a key historical level. Support holds at HKD 115-$120, bolstered by volume spikes and institutional buying noted on social media. A strong earnings beat could drive it to HKD 135 (CITIC Securities’ target), fueled by AI tailwinds. However, overbought signals (RSI nearing 70) and profit-taking risks loom, with a drop to HKD 110 possible if earnings underwhelm. The Hang Seng Tech Index’s volatility post-symposium adds uncertainty.

Conclusion: A Cautious Bet

Alibaba’s AI prowess and today’s climb to HKD 126.30 signal breakout potential if Q4 earnings highlight cloud growth and strategic wins like the Apple deal. Yet, Xi’s symposium underscores persistent economic and political risks—structural frailties and authoritarian oversight—that cloud the horizon. Jack Ma’s return is symbolic, not transformative. I lean toward profit-taking over a lasting surge. China’s macro challenges and Xi’s control suggest Alibaba’s future, while promising, remains murky. Investors should brace for volatility post-earnings, with downside risks outweighing near-term gains unless Beijing delivers unexpected reforms— improbable under Xi.

Disclaimer: This is an opinion piece, not investment advice. Conduct your own research before trading.

@TigerWire