The rally in Alibaba (BABA 4.64%) stock continued today after the Chinese tech giant just announced plans to ramp up its spending on artificial intelligence (AI). That's been a winning approach for American tech stocks, so it wasn't a surprise to see Alibaba jump on the news.
As of 10:22 a.m. ET, the stock was up 9%.
Image source: Alibaba.
Alibaba keeps moving higher
Alibaba announced several initiatives around AI yesterday, including a new partnership with Nvidia, and plans to open new data centers around the world. It also introduced a new AI model that has over 1 trillion parameters.
The company made the announcement at its annual Apsara Conference. Those initiatives come after the company had announced earlier this year that it would spend $50 billion on AI infrastructure over the next three years.
The news also earned it some positive commentary from Bank of America, which raised its price target from $168 to $195, and reiterated a buy rating on the stock. It also said Alibaba was set up as the world's leading full-stack AI services provider.
What's next for Alibaba?
Alibaba has delivered an impressive comeback after the stock was essentially dead money for three years due to a crackdown from Beijing and then weak growth due to challenges in the Chinese economy.
Like other tech stocks, though, Alibaba has been rescued by the AI boom. However, the business's growth is still modest, as organic revenue was up 10% in the June quarter to $34.6 billion, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was down 11% to $6.4 billion.
Still, its cloud intelligence business is delivering strong growth, up 26% in the quarter, and investors should keep their eye on that segment going forward. If Alibaba is a winner in AI, the proof will show up there.
