Alibaba’s Strategic Pivot: Betting Big on AI Infrastructure

Alibaba Group is beginning its new fiscal year with a decisive move that highlights its ongoing evolution from an e-commerce titan to a formidable force in artificial intelligence infrastructure. The Chinese conglomerate is positioning itself as an anchor investor for the upcoming initial public offering of AI startup MiniMax, sending a clear signal about its strategic priorities.

The centerpiece of this strategy is the planned Hong Kong listing of MiniMax on January 9, 2026. Founded in 2022, the startup specializes in developing multimodal AI models, placing it in direct competition with firms like OpenAI. The IPO is targeting a valuation in the range of HKD 3.83 billion to HKD 4.19 billion, equivalent to approximately USD 492 million to USD 538 million.

For Alibaba, this investment represents far more than a simple financial stake. MiniMax, which generated USD 30.5 million in revenue during 2024, provides access to cutting-edge generative AI technologies. These capabilities can be seamlessly integrated into Alibaba's expansive cloud ecosystem, aligning perfectly with the company's aggressive expansion plans.

Cloud Division Demonstrates Explosive Growth

The success of Alibaba's strategic refocusing is evident in its cloud computing division's performance. For the most recent quarter (Q2 FY2026), the segment's revenue expanded by 34 percent year-over-year. Even more impressive is the consistent triple-digit percentage growth in AI-related product sales, a trend that has now persisted for nine consecutive quarters.

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To maintain this momentum, Alibaba has committed to investing USD 53 billion over the next three years into AI and cloud infrastructure development. These substantial expenditures are fully covered by the robust cash flows generated from its established commerce business, which boasts EBITDA margins hovering around 44 percent.

Market Analysts Identify Undervaluation

Despite a substantial share price advance of 77 percent throughout 2025, many market researchers continue to view Alibaba's equity as undervalued. Trading at a price-to-earnings ratio between 16 and 20, the company's shares are priced at a significant discount compared to U.S. rivals such as Amazon and Microsoft.

The consensus among analysts ranges from "Moderate Buy" to "Strong Buy," with price targets set between USD 190 and USD 205. This range implies a potential upside of 30 to 40 percent from current levels. Key catalysts for this optimism include the stabilization of Alibaba's core e-commerce operations and its continued dominance in China's AI-cloud market, where it commands an estimated 36 percent market share.

Strategic Outlook Hinges on Integration

The MiniMax listing will serve as a critical test of Alibaba's ability to solidify its position as a dominant player in China's AI sector. With a net cash position exceeding USD 50 billion, the conglomerate possesses ample resources to pursue additional strategic acquisitions. The ultimate determinant of success, however, will be the effective integration of these advanced technologies into Alibaba's own cloud architecture.