Alibaba stock price has bounced back this year, soaring to its highest level since November 2021. BABA rose to a high of $140 in New York, and is beating other technology companies like Amazon and Alphabet. It has jumped by over 110% from its lowest level in 2024 and is the best-performing Hang Seng index stock. Let’s explore the three reasons the Alibaba share price has surged.
Alibaba stock boosted by strong technicals
The first main reason why the BABA stock price is surging is that it has some of the best technicals.
The weekly chart shows that the BABA share price peaked at $308 in 2020 and then crashed to a low of $56 in 2023.
It has remained in a consolidation phase in the past three years, a sign that it was in the accumulation phase of the Wyckoff Theory.
Alibaba stock price has now surged above the crucial resistance level at $117.90, the highest swing in October last year. It has moved above the 23.6% Fibonacci Retracement level.
Alibaba share price has also jumped above the 50-week and 200-week Weighted Moving Average (WMA), forming a golden cross pattern.
BABA stock has also formed a consolidation, which is part of a bullish pennant pattern. Also, oscillators like the Relative Strength Index (RSI) and the MACD indicators have continued rising.
Therefore, the path of the least resistance for the stock is bullish, with the next point to watch being at $183, the 50% retracement point, which is about 32% above the current level.
BABA stock chart | Source: TradingView
Read more: Alibaba stock rebound is elusive, but a comeback is coming in 2025
BABA has become a key player in AI
The other reason why the Alibaba stock price has soared is that it has become one of the biggest players in the artificial intelligence industry. On Thursday, the company launched a new artificial intelligence model that it says will be better and more advanced that OpenAI’s ChatGPT.
The main feature of this model is its new R1-Omni, which introduces the concept of emotional intelligence. This new feature is part one of the several models that Alibaba has worked on in the past few years.
There are signs that its AI investments are starting to pay off as Apple has selected Alibaba for its AI integration in China.
Read more: Alibaba launches AI model Wan 2.1 for video and image generation
Beijing supports Chinese technology companies
The main reason why the Alibaba stock price crashed in the past few years is that Beijing decided to go to war with its local tech companies. In Alibaba’s case, the plunge started after Jack Ma delivered a speech criticizing regulators.
Beijing responded swiftly. It paused the Ant Financial IPO that would have valued the company at over $300 billion. Authorities then proposed major changes that have largely decimated the fintech company.
They then investigated the company and issued a big fine for anticompetitive behaviour. Beijing also embedded its regulators into the company.
Recently, however, Beijing has completed its investigations and is keen to work with Alibaba and other tech firms. Xi Jinping even met with Jack Ma this year.
Read more: Alibaba stock price forecast: BABA could surge 90% soon
Albaba’s business is doing well
Further, the Alibaba stock price has done well because its business is doing well. Its revenue has stabilized, and there are signs that it will go back to growth again now that the Chinese economy has bottomed up. Wall Street analysts expect that its revenue will rise 6.8% this quarter, leading to an annual figure of 999 billion RMB this year.
Further, Alibaba has deployed its capital to reward shareholders through share buybacks and dividends. It has reduced the number of outstanding shares from over 2.71 billion in 2021 to 2.31 billion today. Share buybacks help to create shareholder value by increasing the earnings per share.
Read more: Buy Alibaba stock for a 50% return over the next twelve months: Loop Capital
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