After years of decline, Chinese tech giant Alibaba is making a strong comeback. Its U.S.-listed shares soared nearly 60% this year, adding over $100 billion to its valuation.
The company’s regained momentum was mainly driven by Jack Ma’s leadership and the firm’s AI growth, with DeepSeek helping pull in more investors and consumers to Chinese products, including Alibaba’s.
Dan Ives, the global lead of technology research at Wedbush Securities, even commented on the growing demand for Chinese technologies and Alibaba, saying, “China tech has awoken being led by Alibaba, and investors globally are viewing this as the best way to China tech … and we agree. Alibaba is in pole position to benefit from AI and cloud spend.”
Regulatory hurdles stifled Alibaba’s growth in the last few years
Analysts believe Alibaba’s downturn began in October 2020, when Jack Ma called out the Chinese regulator for stifling innovation.
At the time, the Ant Group, an Alibaba affiliate, was preparing for the pricing of its initial public offering (IPO), bound to be the largest listing to date. However, just two days before the planned listing, Ant Group called off the IPO due to regulatory constraints.
The company’s regulatory challenges poured into 2021, with regulators pushing an 18.23 billion yuan fine, roughly $2.8 billion, on the tech giant, citing market monopolization. The firm was also still struggling with growing competition and market uncertainty as the Chinese economy grappled with post-pandemic recovery.
Then, in March 2023, the company reformed into six autonomous business sectors, hoping to increase its sales in the individual businesses. Moreover, in June of the same year, the firm changed its CEO of four years, Daniel Zhang, to Eddie Wu.
However, the leadership changes did bring a lot of confusion and uncertainty, especially among employees, and the division into separate groups did not help the company much.
Alibaba’s share price remained close to historic lows, growth was still sluggish amid intense competition and heavy regulatory scrutiny, and Ma himself stayed out of the public eye.
Ma’s return to the public may have helped Alibaba recover
In November 2023, however, Jack Ma issued an internal memo at the firm, wanting the company to “correct its course.” His words may have reignited optimism in Alibaba, as the company started seeing a surge in its core business and has now grown to be a key AI service provider.
The firm is on better terms with the Chinese government at the moment, with AI development becoming a priority for Xi Jinping’s government and the country’s economic growth. Among other tech founders, Jack Ma also met with Xi, and analysts believe that the Chinese government fully supports Alibaba’s business.
Eddie Wu and Joseph Tsai’s leadership has also helped Alibaba’s business recover.
Wu decided to steer away from the idea of six separate businesses to at least two core businesses, increasing focus on e-commerce and cloud computing.
Tsai, on the other hand, encouraged the company to adopt a startup mentality. He argued that established corporations progress slower because of the complexities in their hierarchy structure and decision-making, asking the firm to “act fast” and quicker with decision-making.
He also promoted the shift to two core businesses, saying it made it easier to communicate with their workers and claiming that they needed a simpler structure in their minds to move faster.
Under Tsai and Wu’s management, more younger people were allowed to contribute to decision-making. Tsai even claimed that allowing them to make more decisions lets them make mistakes and learn from them.
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