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Alibaba shares rise 6% after beating out huge gains

Alibaba said it is working on a rival to ChatGPT, an artificially intelligent chatbot that is causing excitement around the world. Alibaba said its products are currently undergoing internal testing.

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Alibaba beat expectations by reporting third-quarter earnings, with the tech giant’s U.S.-listed shares up 6%.

Method is as follows Alibaba Compared to Refinitiv’s consensus forecast for the quarter ended December 31, 2022:

  • Sales: CNY 247.76 billion (USD 35.92 billion) vs. forecast CNY 245.18 billion, up 2% y/y.
  • Earnings per US depositary share: 19.26 yuan vs. forecast 16.26 yuan, up 14% year-on-year.
  • Net profit: 46.82 billion yuan to 34.02 billion yuan, up 69% year-on-year.

About $600 billion has disappeared from Alibaba’s value since its peak in October 2020. Strict Covid-19 Control Policy — and the ensuing economic slowdown — hit the e-commerce giant.

Alibaba shares in Hong Kong closed higher on Thursday ahead of earnings.Investors are betting China’s economic reopening will boost consumer sentiment and spending, ultimately helping the e-commerce giant. Ended strict Covid controls This is unlikely to be fully reflected in the quarter, but lockdowns and such.

Meanwhile, China’s tightening of regulations over the past two years has begin to relaxbecause the application of the rules becomes more predictable.

Revenues from China’s commercial sector, including Alibaba’s biggest business, popular marketplace Taobao, totaled 169.99 billion yuan, down 1% year-on-year. The decline was due to a 9% year-on-year decline in customer management revenue from Alibaba’s marketing and other services it sells to merchants on Taobao and its Tmall e-commerce platform.

According to Alibaba, total merchandise volume, or transaction value across its online shopping platform, declined mid-single digits year-on-year, primarily due to weak consumer demand and ongoing competition, as well as the surge in COVID-19. A case in China that caused supply chain and logistics disruptions in December.”

The company said it is seeing a recovery in China’s economy and consumption.

“Looking ahead, we expect consumer sentiment and economic activity to continue to recover,” Alibaba CEO Daniel Zhang said in a press release.

With activity in China slowing, Alibaba has sought growth in overseas markets through its Southeast Asian business Lazada and global e-commerce site AliExpress. International commerce revenue increased by 18% year-on-year to RMB 19.47 billion.

Analysts expect Alibaba to see faster revenue growth over the next few quarters as the effects of China’s economic reopening are fully felt.Morgan Stanley Alibaba Named ‘Top Pick’ For the first time in three years in China’s tech sector, according to a recent memo.

Improve profitability

Last year, Alibaba embarked on the following measures: Cost control to improve profitabilityThe company is trying to find a balance between cost and continuing to make significant investments for long-term growth.

Those efforts appear to have paid off with a 69% year-over-year increase in net profit. The company’s operating margin for the December quarter was his 14%, up from his 3% in the same period last year.

In the December quarter, Alibaba was able to cut losses across all its businesses, including its logistics division Cainiao and its cloud division.

Toby Xu, Chief Financial Officer of Alibaba, said in a press release:

Alibaba had 239,740 employees at the end of the December quarter, down more than 4,000 from the previous quarter.

Cloud slowdown continues

Alibaba reported third-quarter cloud revenue of 20.18 billion yuan, up 3% year-on-year. This marks a slowdown from the 4% revenue growth seen in the previous quarter and remains far from the 30%+ growth seen in the past.

Cloud computing accounts for just 8% of Alibaba’s revenue, but analysts see it as the company’s future growth driver.

Alibaba said it has also grown from industries outside the internet, including financial services, education and auto companies, using its cloud services. However, income from the public service industry declined.

Alibaba said earlier this month that it was working on a ChatGPT-style technology that could be integrated into its products. ChatGPT is a very popular chatbot. A product of OpenAI. This is an example of so-called generative AI, which uses artificial intelligence to generate images and text.

Zhang said on Thursday’s earnings call that Alibaba aims to “capture market opportunities” and provide the computing power needed for generative AI applications through its cloud division. Generative AI requires massive amounts of data processing to train AI models. This requires a lot of computing power that cloud companies can provide.

“We expect the demand for computing power to grow exponentially,” Zhang said, as these technologies develop.

Alibaba has not provided details about its ChatGPT rival, but has said it is not a “chatbot for chatbots.”

Instead, Zhang said Alibaba will integrate chatbots “into its business around consumption, user experience and content generation to drive higher advertising effectiveness.”

“AI can play a big role in all of these different areas,” he added.

Alibaba buyback continues

https://www.cnbc.com/2023/02/23/alibaba-shares-rally-4percent-after-massive-earnings-beat.html Alibaba shares rise 6% after beating out huge gains

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