Alibaba stock surges 12% as AI cloud strength offsets Anthropic dispute and Pentagon scrutiny

Alibaba Stock Posts Largest Single-Day Gain Since September 2025

Alibaba stock surged 12.2% to reach $107.50 in premarket trading on July 9, marking its largest single-session gain since September 20254

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. The dramatic rally came after a pre-earnings briefing revealed that losses in the company's instant-commerce business narrowed meaningfully in the June quarter while overall profitability remained intact4

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. Alibaba Group Holding shares had fallen more than 33% year to date as investors worried about China's slowing economy and questioned how quickly the company could monetize its AI investments1

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. The stock currently trades at $98.14, near its 52-week low of $91.99, and at about 15.2 times earnings1

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. Despite the significant rally, shares remain well below their 52-week high of $186.204

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Jefferies Reaffirms Confidence in Alibaba AI Transformation Strategy

Jefferies analyst Thomas Chong reiterated a Buy rating and $185 price target on Alibaba, expecting the company to deliver solid execution in the June quarter despite macro headwinds1

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. Chong believes much of the pessimism surrounding Alibaba stock is already reflected in the current price1

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. For AliCloud, Jefferies expects year-over-year acceleration with performance better than expectations on strengths in AI demand and MaaS3

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. The firm reaffirmed Alibaba as a top pick on the AI story ahead, with sequential improvement in cloud margin expected3

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. Bernstein also maintained an Outperform rating, highlighting that AI revenue reached RMB9 billion, accounting for 30% of external Alicloud revenue3

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Alibaba Cloud Dominates China's AI Market Despite Anthropic Dispute

Alibaba Cloud held a commanding 40.1% share of China's full-stack AI cloud market, ahead of Baidu, ByteDance's Volcano Engine, and SenseTime combined, according to Frost & Sullivan data2

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. This market dominance gave investors reason to look past the escalating AI scandal with Anthropic and focus on Alibaba's underlying AI business instead2

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. Revenue growth in Alibaba Cloud reportedly accelerated in the first quarter of fiscal 2027, strengthening the case that the company's heavy AI investments are translating into commercial traction4

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. The company recently announced a comprehensive upgrade to its AI stack, including cloud infrastructure, model services, AI chips, and foundation models at the Alibaba Cloud Summit3

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. Alibaba introduced its latest large language model, Qwen3.7-Max, designed for complex reasoning and task execution3

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AI Scandal with Anthropic Escalates as Alibaba Bans Claude Code

Alibaba banned employees from using Anthropic's Claude Code for work starting July 10, placing the coding tool on a high-risk software list after developers found code capable of detecting whether a user was based in China2

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. The ban follows a separate accusation where Anthropic told the U.S. Senate Banking Committee that operators linked to Alibaba's Qwen lab ran roughly 25,000 fraudulent accounts to extract Claude's capabilities through "distillation"2

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. Anthropic called this the largest attempt of its kind, as distillation trains a cheaper model on a stronger one's outputs2

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. Alibaba told staff to switch to its own coding platform, Qoder, instead of Claude Code2

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. The company is systematically consolidating its enterprise AI Agent product line, folding three separate tools—QoderWork, Wukong, and MuleRun—into a single unified productivity platform to be led by DingTalk CEO Chen Yusen4

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Share Buyback and Earnings Report Signal Management Confidence

Alibaba's ongoing share buyback program saw approximately 4.11 million shares repurchased on July 6 for roughly $50 million, underscoring management's conviction in the stock's value at current levels4

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. Investors are now looking ahead to Alibaba's estimated August 28 earnings report, with Wall Street expecting earnings per share of $2.51, up from $2.06 a year earlier1

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. Revenue is projected to reach $38.72 billion, compared with $34.57 billion in the prior-year quarter1

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. The company reported fourth-quarter revenue of RMB243 billion, marking a 3% year-over-year increase, or 11% when excluding certain disposals3

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. A federal judge also paused a Pentagon rule that had stripped Alibaba of its Washington lobbyists over an alleged military link, restoring the company's access to policy channels while the fight continues2

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. The rally was amplified by a broad rotation into Hong Kong-listed Chinese internet stocks, with the Hang Seng Tech Index climbing over 5% on the session4

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