BABA Stock Climbs Over 4% In Friday Pre-Market: What's Going On?

Alibaba Group Holding Ltd. BABA climbed 4.2% during the pre-market trading session on Friday following strong financial performance for the third quarter.

What Happened: The Chinese tech giant posted stellar results for the December quarter surpassing expectations. Alibaba’s third-quarter revenue grew 8% YoY to $38.38 billion, surpassing analyst estimates, while adjusted earnings per ADS of $2.93 beat consensus expectations of $2.66. The revenue for Alibaba's Cloud Intelligence Group witnessed a 13% year-on-year growth to $4.37 billion with revenue from AI-related products experiencing triple-digit growth for the sixth straight quarter.

The company’s CEO Eddie Wu stated, "This quarter's results demonstrated substantial progress in our ‘user first, AI-driven' strategies and the re-accelerated growth of our core businesses.”

Also, during the company’s third-quarter earnings call, CFO, Toby Xu, confirmed the 5% net reduction in share count. The Chinese tech behemoth repurchased $1.3 billion of its shares in the December quarter. This follows an approximate $10 billion in buybacks during the first half of fiscal 2024. The company still has $20.7 billion left in its buyback authorization. The buyback strategy was implemented as Alibaba reported $83.6 billion in cash reserves as of Dec. 31. 

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Why It Matters: The stock has seen nearly an 80% surge over the past 12 months, bolstered by China’s economic stimulus measures and growing traction in Alibaba’s AI offerings. This growth in AI offerings aligns with the company’s belief that the real value in artificial intelligence will come from cloud infrastructure rather than the models themselves.

Moreover, CEO Eddie Wu revealed expectations that the company's International Commerce Unit would achieve profitability in the next fiscal year.

Meanwhile, Alibaba’s board-level capital management committee also continues to manage shareholder return initiatives through a mix of dividends, share buybacks, and strategic investments.

The stock also surged in Hong Kong market on Friday as economists predict China's central bank could lower its main policy rate in March

Alibaba’s ADR closed at $135.97 on Thursday, gaining 8.09% for the day. In after-hours trading, the stock rose an additional 0.82%. Year to date, Alibaba shares have surged 60.06%, according to data from Benzinga Pro.

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