Blog

The frenzy over Chinese artificial intelligence is turning Alibaba Group Holding Ltd. into an investor favourite again, injecting new life into an ecommerce giant that had nearly sunk into obscurity following a years-long regulatory crackdown.

Alibaba’s Hong Kong-listed shares have surged 46% since hitting a 2025 low on January 13, expanding its market value by nearly $87 billion and exceeding the Hang Seng Tech Index’s 25% gain in the same period. That makes the stock by far the best performer in China’s Big Tech universe in the new year, outshining rivals Tencent Holdings Ltd., Baidu Inc. and JD.com Inc.

It marks a surprise reversal of fortunes for Alibaba, which had fallen out of favour among investors after its business suffered from Beijing’s clampdown on the country’s tech behemoths and a post-Covid consumption slump. Behind the rally is optimism about Alibaba’s efforts to develop its own AI services and platform, which gained traction after Chinese AI startup DeepSeek unveiled technologies that caused a rout on Wall Street.

Alibaba’s shares got another shot in the arm on Wednesday, after the Information reported that Apple Inc. is working with the ecommerce pioneer to roll out AI features in China.

“The emergence of DeepSeek has sparked a new AI-related catalyst for Chinese tech stocks,” said Andy Wong, investment and ESG director for Asia Pacific at Solomons Group. “Within this space, we see Alibaba as having more tangible and well-established earnings growth prospects in the medium term.”

Alibaba’s 2025 bounceback is the culmination of a year-long turnaround spearheaded by two of Jack Ma’s oldest lieutenants: Joe Tsai and Eddie Wu. The chairman and CEO, part of the original founding team that created Taobao in Ma’s lakeside apartment, took the helm in 2023 right after years of Beijing-led regulatory investigations and a post-Covid downturn gutted its cloud and consumer businesses. They took the company back to basics, initially focusing on consolidating and streamlining the fragmented core commerce business.

They also decided to go big in AI. Since the advent of ChatGPT, Alibaba has invested in a clutch of China’s most promising startups, including Moonshot and Zhipu. And it prioritized the expansion of the cloud business that underpins AI development, slashing prices to win back the customers that fled to rivals during the turbulent years. It also decided to spend on AI, joining a race led by Baidu at the time.

In January, that effort yielded initial fruit. Alibaba published benchmark scores showing its Qwen 2.5 Max edition scored better than Meta Platforms Inc.’s Llama and DeepSeek’s V3 model in various tests. The company is now considered a leading player in AI alongside big names from Tencent to ByteDance Ltd. and startups including Minimax and Zhipu.

But it’s still early days.

A key hurdle facing Chinese AI firms has been the slower adoption and lack of willingness to pay for services among domestic consumers and businesses.

“Many hedge funds and long-only investors see AI as a potential inflection point for Alibaba, with some expressing interest in understanding the valuation of Alibaba’s cloud business and any upside from large language models,” JPMorgan Chase & Co. analysts including Alex Yao wrote in a note. “The AI narrative is seen as a driver for potential re-rating, but there are concerns about the monetization of AI capabilities.”

In addition, cloud business growth for Chinese hyperscalers has lagged that of major US peers so far. Analysts estimate cloud revenues for the December quarter rose 9.7% from a year ago at Alibaba and 7.7% at Baidu, compared with 19% at Amazon.com Inc. and 31% at Microsoft Corp.

Alibaba’s financial results scheduled next Thursday are expected to offer investors a fresh opportunity to learn about the company’s progress on its AI models and outlook for its cloud services.

For now, derivative traders are boosting their bets. Options contract volumes surged to more than twice the 20-day average on Wednesday in Hong Kong, reaching their highest level in over four months. More than 110,000 bullish contracts changed hands, compared with over 74,000 puts. The cost of hedging against declines in the coming month has dropped to near its lowest level since November.

Alibaba’s valuations remain attractive to some investors even after the latest rally. Its shares are trading at 12.2 times forward earnings, below its five-year average of 14.6 times.

“Despite the rally, Alibaba’s stock is still undervalued compared to its US tech peers, considering its growth potential and market position,” said Manish Bhargava, chief executive officer at Straits Investment Management in Singapore. “The company is expanding its overseas marketplaces, which could reduce its reliance on the domestic Chinese market and drive future growth.” Bloomberg

Social media company X has agreed to pay about $10 million to settle a lawsuit by President Donald Trump, who has put X’s billionaire owner Elon Musk in charge of a major government cost- and staff-cutting effort.

Trump had sued X, then known as Twitter, and its then-CEO Jack Dorsey in San Francisco federal court for deplatforming his account following the Jan. 6, 2021, riot at the US Capitol by his supporters. Twitter had cited the risk of Trump inciting further violence related to his effort to remain in the White House following his loss to former President Joe Biden in the 2020 election.

Trump claimed Twitter had violated his First Amendment right to free speech

The Wall Street Journal first reported the settlement on Wednesday.

John Kelly, one of Trump’s attorneys in the lawsuit, confirmed to CNBC that the president and X reached a settlement.

“It’s resolved,” Kelly told CNBC.

NBC News later Wednesday confirmed settlement involved a payment of about $10 million by X, citing a source familiar with the situation.

CNBC has requested comment from a lawyer for X.

At the time of the settlement, Trump had been waiting for more than a year for the outcome of an appeal of the dismissal of his lawsuit by a federal district court judge in 2022. On Monday, the 9th Circuit US Court of Appeals granted a motion by all parties in the case to dismiss that appeal.

Meta, the owner of Facebook and Instagram, on Jan. 29 said it would pay $25 million to settle Trump’s lawsuit over that company’s decision to suspend Trump’s social media accounts after the Capitol riot.

The settlement with X comes as Tesla CEO Musk oversees the Trump administration’s wide-ranging effort to cut federal government spending and staffing levels as the head of DOGE, or Department of Government Efficiency.

Musk, who spent more than $250 million to help Trump win election to a second term in the White House, purchased Twitter in October 2022 for $44 billion.

Musk reinstated Trump’s X account in November 2022. CNBC

India’s second-largest telecom operator, Bharti Airtel, is continuing to narrow the revenue market share (RMS) gap with sector leader Reliance Jio, analysts said after the firm’s third-quarter earnings.

“Over the last two quarters, Airtel has narrowed the wireless RMS gap versus Jio by almost 300 basis points (bps), driven by strong residual flow-through of the July 2024 tariff hikes and a 90% incremental margin in the India wireless business (versus 49% for Jio),” Motilal Oswal said.

Revenue Market Share (RMS) measures a telecom operator’s share of total industry revenue, reflecting its financial strength and market competitiveness. Unlike subscriber share, RMS shows how well a company monetises its user base.

Tariff Hike Helps Airtel
Motilal Oswal’s report noted that Bharti Airtel has benefited the most from recent price hikes in mobile plans, with its average revenue per user (ARPU) rising by Rs 35 over the last two quarters, compared to Rs 20 for Jio. In percentage terms, Reliance Jio’s ARPU increased by 11.9% year-over-year, while Bharti Airtel’s grew by 18%.

Bharti Airtel, following Jio’s lead, increased its tariffs on both prepaid and postpaid plans in July last year. The price hikes ranged from 10-21% across various plans. Airtel also revised its entry-level criteria for free unlimited 5G access.

Previously available on more affordable plans, 5G access was limited to plans offering 2GB of data per day or more, with customers needing to spend at least Rs 649 to benefit from unlimited 5G. This placed Airtel’s 5G entry point at twice the cost of Jio’s similar plans, which start at Rs 349, even after their price hike.

At the time, the company said that the move was aimed to ensure that its average revenue per user (ARPU) must exceed Rs 300 to support the significant investments needed for network technology and spectrum, while also providing a modest return on capital.

Airtel’s ARPU for the third quarter stood at Rs 245, compared to Rs 208 in Q3 FY24, and was also higher than its peer, Jio, which reported Rs 203 in Q3FY25.

Airtel Benefits from 4G Transition
ICICI Securities reported that between October and December 2024, Reliance Jio gained 3.3 million subscribers, while Sunil Mittal’s Bharti Airtel gained 4.9 million. Airtel also added 6.5 million 4G subscribers during the quarter.

“Bharti benefited from the 2G to 4G transition and a strong post-paid subscriber base, which grew by 13.1% year-over-year,” ICICI Securities noted. Adding that the sharp rise can be attributed to winning back customers lost in the previous quarter.

According to TRAI’s data, Airtel and Jio lost subscribers after hiking their tariff rates, while state-owned BSNL gained. In October, Airtel finally gained 1.9 million users, while Jio lost 3.8 million users. Meanwhile, BSNL added subscribers for the fourth consecutive month, taking its total user base to 92.4 million till October 2024. Vodafone Idea’s user base stood at 210.5 million, adding 1.98 million users in October.

The Motilal Oswal also noted that Airtel’s India wireless business is now generating similar profits (EBITDA) to Jio, even though Jio includes earnings from its home broadband service.

Airtel’s mobile revenue in Q3 FY25 increased by 21.4% year-over-year and 5.8% quarter-over-quarter. In comparison, Jio’s revenue grew by 3.4% quarter-over-quarter and 15.5% year-over-year during the same period.

Captial Expanding to Decline
Looking ahead, the brokerage expects Airtel’s revenue and profit to grow strongly due to continued price hikes, an expanding broadband business, and strong growth in Africa.

As Airtel reduces its capital spending, it is expected to generate Rs 1 lakh crore in free cash flow over FY25-26, which will help reduce debt and improve shareholder returns, said the Motilal Oswal report. Outlook Business

India should consider zero tariffs on semiconductor manufacturing if it wants to become a significant player in global supply chains, says John Neuffer, President and CEO of the US Semiconductor Industry Association.

In an exclusive chat with CNBC-TV18, Neuffer emphasised that while India is on the right trajectory in growing its chip-manufacturing footprint, it is important to have a lower tariff and more conducive trade policy. “US is already getting zero tariff treatment from chip supply chain partners around the world but not from India”, he said. He added that more investments in skilling people — not just in design but actual chip manufacturing — would pay off in the long run.

The US Semiconductor Industry Association represents 99% of American semiconductor companies and two-thirds of semiconductor companies worldwide. Neuffer said that India must take one bite of the apple at a time to show the world its intent to be a reliable long-term partner in semiconductor manufacturing at a time of intensifying competition in chip production in Southeast Asia.

The SIA has expressed concerns about the Trump administration’s plans to impose higher tariffs on Taiwan-manufactured semiconductors. Trump has proposed to impose 100% tariffs on semiconductor imports from Taiwan. Neuffer said such a policy, if implemented, would be problematic and cause huge disruption.

“[The] US is very dependent on global semi-conductor supply chains, and we need components as cheaply as possible. Tariffs raise costs for US semiconductor fabs and manufacturing,” he said. The United States continues to dominate global semiconductor manufacturing with a more than 50% market share.

The Trump administration is scrutinising contracts handed out by the Biden administration under the CHIPS Act, which Neuffer says has already resulted in commitments to the tune of half a trillion dollars in chip fabrication in the USA. “By 2032, US would have tripled its manufacturing of the world’s most advanced chips, or 30% of the world’s most advanced chips would be made by America by 2032,” he adds.

According to the SIA, the global semiconductor industry saw a robust 20% growth in 2024, and growth in 2025 is expected to be higher than 11%. CNBCTV18

The Karnataka government signed a Memorandum of Understanding with ASM Technologies Limited, a design-led manufacturing company in the semiconductor and automotive industries for an investment of Rs 510 crore in the state at ‘Invest Karnataka 2025’ on Wednesday. The city-based ASM Technologies will expand its Electronic System Design and Manufacturing (ESDM) capacity, according to a company press release.

As part of the agreement, ASM Technologies will acquire 10 acres of land from the Karnataka Industrial Areas Development Board (KIADB) to establish a state-of-the-art design facility, the release added.

“This expansion will enhance our precision engineering capabilities in the electronics, semiconductor and solar industries, create employment opportunities and drive technological advancements in the region,” said Rabindra Srikantan, managing director of ASM Technologies Limited.

The company also recently commenced operations at two new state-of-the-art manufacturing facilities in Dabaspet, Karnataka and Sriperumbudur, Tamil Nadu, the release stated. PTI