Alibaba’s Strategic Pivot: AI Integration and Portfolio Refinement Take Center Stage

Alibaba Group is advancing its artificial intelligence initiatives while continuing to streamline its investment holdings. The Chinese tech giant is channeling more resources into applications for its proprietary AI model, Qwen, and has recently reduced a portion of its stake in furniture retailer Red Star Macalline. A key focus for this AI push is the company's popular mapping application, Amap.

A significant strategic development is the full integration of Alibaba's large language model, Qwen, into its navigation service, Amap (also known as Gaode Map). This move is a core component of the group's "User First, AI-Driven" strategy. With over 170 million daily active users, Amap represents one of the most widely used applications within Alibaba's ecosystem. The incorporation of Qwen is designed to enable smarter travel planning and more natural user interactions.

This deployment serves as a critical test case for Alibaba. Successfully demonstrating tangible value from Qwen in a high-traffic, everyday app like Amap would strengthen the rationale for rolling out similar AI features across the company's more revenue-intensive platforms, such as Taobao and Tmall. This pathway is seen as essential for translating substantial AI investments into concrete financial returns.

Ongoing Portfolio Rationalization

The company's divestment activity aligns with its broader strategy of reallocating capital from peripheral investments to core segments like e-commerce and cloud computing. On December 16, Alibaba sold a portion of its shares in Red Star Macalline Group Corp. Ltd. on the Hong Kong exchange.

The transaction involved approximately 7.63 million Red Star Macalline shares at an average price of HK$1.1759 per share. This generated proceeds of nearly HK$8.98 million for Alibaba—a relatively modest sum for a corporation of its size but a clear signal of its disciplined approach to capital allocation. Following this sale, Alibaba retains about 76.37 million shares, maintaining a significant stake of roughly 10.3% in the retailer. The action underscores a focus on portfolio optimization rather than a wholesale retreat from the retail sector.

Should investors sell immediately? Or is it worth buying Alibaba?

Market Sentiment and Technical Positioning

Investor reaction has been mixed, balancing near-term concerns against long-term strategic goals. Although shares recently traded at €126.20, showing a slight daily gain, this price remains approximately 22% below the 52-week high. This follows a period of earlier strength at the start of the year. Technically, the stock's 14-day Relative Strength Index (RSI) of 29.4 indicates it is approaching oversold territory, reflecting recent selling pressure.

Analysts are drawing a distinction between immediate and future impacts. The partial sale of the Red Star Macalline stake has a minimal direct financial effect relative to Alibaba's total scale. However, it demonstrates management's continued effort to exit potential "value traps" and improve return on invested capital (ROIC). Conversely, the Qwen integration directly addresses the pivotal question of how Alibaba plans to operationalize and monetize its significant AI expenditures.

The Road Ahead

The next scheduled catalyst for the stock is the earnings report for the quarter ending December 31, 2025, which is set for release on February 19, 2026. The market will scrutinize not only revenue and margin figures but also any commentary from management regarding early user metrics for Qwen within Amap and potential expansion plans to other applications.

In the interim, Alibaba's execution on its dual-track strategy will be paramount. Sustained progress in pruning non-strategic investments, coupled with visible advancements in deploying AI within its core services, will be the metrics by which the company is judged in the coming months.