What's Going On With Alibaba Stock Thursday?

Alibaba Group Holding Limited BABA Cloud announced a significant price reduction of up to 55% on a broad array of its core cloud products, starting Thursday, to regain market share from competitors like Tencent Holdings Ltd TCEHY and Baidu Inc BIDU. 

Alibaba will offer discounts of up to 55%, averaging 20% across over 100 internet-based services, including data storage and elastic computing. 

The decision follows the company’s surprising cancellation of a spinoff and IPO for its cloud unit, Aliyun, a growth engine essential for AI advancements, Bloomberg reports.

This strategic move aims to democratize cloud capabilities amidst the burgeoning era of AI, ensuring that more enterprises and developers can leverage the benefits of advanced public cloud services. 

Liu Weiguang, president of the public cloud business at Alibaba Cloud Intelligence, emphasized the potential growth of China’s digital market and the company’s commitment to facilitating more comprehensive access to cloud services, CNBC reports. 

This initiative aligns with the explosive interest and investment in generative AI technologies. 

A McKinsey report from November 2023 underscored the crucial role of cloud infrastructure in supporting generative AI projects, noting the necessity for scalable cloud platforms to manage the complex demands of generative AI applications effectively. 

Moreover, Canalys forecasts a 20% growth in global cloud service spending in 2024, driven by the rapid adoption of AI applications. 

Analysts and experts weigh in on Alibaba’s strategic pricing adjustment. Vey-Sern Ling, managing director at Union Bancaire Privee, remarked, “Alibaba’s cloud business has been facing tough market conditions and rising competition. The price cuts, under new management, aim to rejuvenate growth, but their effectiveness remains to be seen.” 

Bloomberg Intelligence analysts Catherine Lim and Trini Tan suggest that the price reductions could spur customer acquisition and technology enhancement for Alibaba Cloud, potentially revitalizing revenue growth in the latter half of the fiscal year.

However, skepticism remains regarding the impact of these discounts on Alibaba’s market share, especially against the backdrop of competitors like Huawei Technologies Co making significant inroads. 

“Alibaba’s attempt at price reductions in 2023 had limited success, and we anticipate continued market share losses to Huawei through 2024,” said Bloomberg Intelligence analyst Robert Lea.

This week, Alibaba led a $1 billion investment in Moonshot AI, significantly boosting the startup’s value to approximately $2.5 billion. 

Invesco Golden Dragon China ETF PGJ has close to 9% exposure to Alibaba. It has gained 13% last month.

Price Action: BABA shares traded higher by 0.34% at $74.85 premarket on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Alibaba Photo by zhu difeng on Shutterstock