Key Takeaways:
A new report from Shenwan Hongyuan suggests Alibaba Group Holding Ltd. is replicating Google’s successful full-stack artificial intelligence strategy, a move that could unlock nearly 100% upside for the company’s stock. The analysis positions Alibaba as a primary beneficiary of China’s AI infrastructure boom, with a price target of $234.
“In the global landscape of leading cloud providers, only Google and Alibaba have pursued a ‘full-stack, self-developed’ path, simultaneously aiming for top-tier in-house capabilities in cloud computing, foundational large models, and AI chips,” the Shenwan Hongyuan report stated.
The strategy appears to be yielding results, with Alibaba Cloud capturing 35.8% of China’s AI cloud market in the first half of 2025, more than the second through fourth-place competitors combined. The company has also deployed its self-designed Zhenwu 810E AI chip in clusters of over 10,000 units. This progress underpins the brokerage’s valuation, which implies a 96% increase from the current share price.
For investors, the report indicates Alibaba is at a crucial inflection point, transitioning from a period of heavy AI investment to one of monetization. This shift is accelerated by recent cloud service price hikes, surging demand for computing power, and a clear roadmap for commercializing its AI models, suggesting a strong potential for profit growth in a market forecast to expand at a 26.8% compound annual rate through 2030.
Alibaba Cloud’s leadership in its home market provides a substantial foundation for its AI ambitions. According to Omdia, its 35.8% share in the AI cloud segment is complemented by a 21.31% share in the broader public cloud IaaS market. This market concentration is enabling a strategic shift in pricing.
Effective April 18, 2026, the company raised prices for AI computing and storage products, with its Zhenwu 810E accelerator cards increasing by 5% to 34%. The move follows similar price hikes by Amazon AWS and Google Cloud earlier in the year, suggesting the industry is entering a new pricing cycle that could directly boost Alibaba’s profitability. The cloud unit’s financials already show momentum, with revenue growing 36% year-over-year to 43.3 billion yuan in the fourth quarter of 2025 and adjusted EBITA margin rising to 9.04%.
Alibaba's Tongyi Qianwen large language model has established a significant global footprint through an open-source strategy. With over 300 open-source models, 600 million downloads, and more than 100,000 derivative models, it leads the world in open-source AI adoption.
This broad ecosystem is translating into commercial success. In the second half of 2025, Qianwen’s share of the Chinese enterprise large-model market jumped to 32.1% from 17.7%, making it the most-used model for business applications, according to Sullivan data. A recent consumer-facing promotion also saw AI-generated orders on its platform exceed 10 million within nine hours, demonstrating its ability to penetrate the C-end market and drive tangible transactions.
The T-Head semiconductor division’s Zhenwu 810E chip is a critical component of the full-stack strategy, creating a key competitive advantage. The chip’s specifications, including 96GB of HBM2e memory, are competitive with international products like Nvidia’s H20 and superior to Huawei’s Ascend 910B in memory capacity.
By deploying these chips at scale within its own data centers, Alibaba creates a "chip-cloud" synergy. This deep integration of hardware and software allows for superior efficiency in scheduling and optimizing AI workloads compared to competitors who rely on third-party chips. This not only builds a cost and performance moat but also ensures a stable supply of high-performance computing amid global supply chain uncertainties. The chip has already been adopted by over 400 enterprise clients, including major players like China’s State Grid and XPeng Motors.
This article is for informational purposes only and does not constitute investment advice.
