Alibaba’s Hong Kong Shares Surge on AI Innovation and Stimulus Boost

Chinese Tech Stocks Rally Amid AI and Economic Developments

Alibaba’s Hong Kong shares experienced a significant spike, spearheading a robust rally among Chinese technology stocks, fueled by the unveiling of a groundbreaking open source artificial intelligence model and optimism surrounding Beijing’s economic stimulus initiatives. Alibaba (NYSE:BABA) (HK:9988) soared 7.3%, reaching $17.79 (HK$139.60), nearing its highest levels since late 2021, and emerged as the primary driver behind a more than 1% increase in Hong Kong’s Hang Seng index. This surge underscored Alibaba’s pivotal role in elevating market sentiment, spotlighting its advancements in AI technology and capitalizing on China’s renewed economic momentum. The e-commerce titan’s latest move involved open-sourcing its QwQ-32B AI model, developed by its Qwen division, which focuses on crafting cutting-edge reasoning AI solutions. Known as Quan-with-Questions, this model debuted in November 2024 to challenge OpenAI’s o1 reasoning AI framework but lingered in relative obscurity until the recent spotlight cast by DeepSeek R1’s release earlier in 2025 reignited interest in China’s AI capabilities. Alibaba claims its QwQ-32B rivals DeepSeek R1 in performance, delivering comparable or superior reasoning abilities while demanding significantly less data, a feat that has captured the attention of investors and tech enthusiasts alike.

The rally extended beyond Alibaba, buoying other major Chinese tech players as investor confidence swelled amid Beijing’s latest economic stimulus announcements. Baidu Inc (HK:9888) (NASDAQ:BIDU) climbed 3.8% to approximately $11.41 (HK$89.50), while Tencent Holdings Ltd (HK:0700) surged 5.5%, hitting around $67.90 (HK$532.50), reflecting robust trading volumes and widespread market enthusiasm. Additional tech and AI-focused companies also reaped gains, with Kingdee International Software Group Co Ltd (HK:0268) skyrocketing 20%, Meitu Inc (HK:1357) advancing 12%, and Kingsoft Corp Ltd (HK:3888) rising 6.5%. Meanwhile, Alibaba’s e-commerce rival JD.com (HK:9618) posted a 3.8% uptick ahead of its quarterly earnings release, further illustrating the broad-based strength across the sector. This collective surge in Chinese technology stocks aligns with a broader trend that gained momentum in late January 2025, spurred by DeepSeek R1’s debut, which disrupted U.S. markets and reaffirmed China’s competitive stance in the global artificial intelligence race. In response, numerous Chinese tech giants, with Alibaba leading the charge, have accelerated efforts to roll out innovative AI models, intensifying the rivalry and driving investor interest in the sector’s growth potential.

Fueling this tech stock rally, China’s government unveiled plans to amplify economic stimulus measures in the coming months, building on policies designed to stimulate personal consumption and bolster domestic demand. These initiatives include sustained subsidies for electronics purchases and additional incentives aimed at revitalizing the consumer market, critical for tech firms heavily reliant on China’s vast consumer base. Announced on March 5, 2025, during the National People’s Congress, the government outlined a 2025 GDP growth target of approximately 5%, paired with an elevated budget deficit of about 4% of GDP, marking the highest level since 2010. Plans to issue roughly $165.6 billion (1.3 trillion yuan) in ultra-long special treasury bonds further signal a robust commitment to economic support, particularly as China navigates trade tensions and potential U.S. tariffs. This strategic economic backing has invigorated Chinese stocks, especially large-cap technology names listed in Hong Kong, which have been on an upward trajectory since DeepSeek’s emergence highlighted the nation’s AI prowess.

Alibaba’s QwQ-32B AI model stands at the forefront of this technological surge, positioning the company as a formidable contender against DeepSeek and other global AI leaders. Early evaluations of QwQ-32B, updated in January 2025 as Qwen 2.5-Max, demonstrated its ability to outperform DeepSeek-V3 in key reasoning benchmarks, such as the MMLU-Pro CS test, where it scored 78% compared to its rival’s lower marks, despite DeepSeek’s massive 671 billion parameter framework. With a capacity to handle prompts up to 32,000 words and excel in complex tasks like mathematics and coding, QwQ-32B offers a leaner, more efficient alternative, appealing to developers and businesses seeking high-performance AI solutions with reduced resource demands. This technological edge, combined with China’s proactive economic policies, has amplified Alibaba’s appeal to investors, reinforcing its leadership in the AI-driven transformation of the tech landscape.

The interplay between Alibaba’s AI advancements and China’s stimulus measures has created a powerful synergy, propelling the company’s stock and its peers to new heights. While the QwQ-32B model’s initial release predates the March 6 rally, its competitive positioning likely sustained investor enthusiasm, amplified by the timely economic stimulus announcements. This dual momentum underscores a broader narrative of resilience and innovation within China’s technology sector, offering a compelling case for sustained growth as the nation balances technological ambition with economic stabilization. As Chinese tech giants continue to unveil cutting-edge AI solutions and leverage government support, the global spotlight on their progress intensifies, promising further developments that could reshape market dynamics and investor expectations in the months ahead.