Alibaba expands AI portfolio, spotlighting earnings as valuation gap widens, analysts say.

Alibaba’s newest AI‑driven marketing suite, Quanzhantui, is already delivering measurable lift for merchants during the company’s flagship Singles’ Day shopping festival, the South China Morning Post reported. The tool, which layers generative‑AI recommendations onto Alibaba’s Taobao and Tmall platforms, helped participating sellers increase conversion rates by roughly 12% and average order value by 8% compared with prior years. The boost is significant because Singles’ Day accounts for more than half of Alibaba’s annual gross merchandise volume, and the firm is positioning Quanzhantui as the flagship product of a broader AI portfolio that now includes large‑language‑model services, cloud‑based vision APIs, and an internal “AI‑first” development framework, according to Bloomberg’s coverage of China’s AI renaissance.

Analysts say the rapid rollout of these capabilities is intended to narrow a valuation gap that has widened to about 30% between Alibaba and its U.S. peers, a figure cited by Simply Wall St. The gap reflects investors’ perception that Alibaba’s earnings growth is lagging behind that of American cloud and AI leaders such as Microsoft and Amazon. By embedding AI directly into its e‑commerce ecosystem, Alibaba hopes to generate new revenue streams that can lift earnings per share (EPS) forecasts. Simply Wall St. notes that the company’s AI‑related services could contribute an incremental $2 billion to revenue by 2027 if merchant adoption scales at the current pace.

The strategic emphasis on AI also aligns with broader macro‑economic trends highlighted by Bloomberg. While U.S. tariffs on Chinese tech continue to create headwinds for cross‑border business, the domestic AI boom—spurred by firms like DeepSeek and Baidu—offers a counterbalance that could improve Alibaba’s growth outlook. Bloomberg’s “AI Showdown” analysis points out that Chinese firms are accelerating their AI investments to catch up with Silicon Valley, and Alibaba’s expansion is a concrete example of that race in action. The report suggests that if Alibaba can translate its AI tools into higher merchant spend, the company may close part of the valuation premium that U.S. investors currently demand for perceived technological leadership.

However, the path to monetisation is not without challenges. Simply Wall St. cautions that Alibaba’s AI initiatives must overcome integration hurdles across its sprawling ecosystem, from logistics to finance, to deliver consistent profitability. Moreover, the company’s recent earnings call revealed that AI‑related operating costs have risen sharply, pressuring margins in the short term. Analysts from Bloomberg echo this concern, noting that while the AI push could eventually drive top‑line growth, the timing of breakeven remains uncertain, especially as competition from Baidu’s Ernie model and emerging open‑source alternatives intensifies.

In the near term, the impact of Quanzhantui on Singles’ Day performance provides a tangible proof point for investors. The SCMP article quotes merchants who attribute a “noticeable uptick” in sales to the AI‑generated product recommendations and dynamic pricing suggestions the tool offers. If similar results can be replicated across other shopping events and extended to Alibaba’s cloud customers, the firm could demonstrate a scalable AI revenue engine. Such evidence would be crucial for narrowing the 30% valuation gap highlighted by Simply Wall St., and for convincing the market that Alibaba’s AI bets are not just experimental but a core driver of future earnings.