(Yicai) Feb. 21 -- Shares of Alibaba Group Holding surged after the Chinese tech giant said fiscal third-quarter profit jumped more than three-fold, buoyed by the strong performance of its core business and aggressive expansion into the artificial intelligence field.

Alibaba [HKG: 9988] closed 14.6 percent higher at HKD138.50 (USD17.83) a share in Hong Kong today, extending its gain to 68 percent so far this year. In pre-market trading in New York, the firm’s stock [NYSE: BABA] was trading 3.9 percent up at USD141.25 as of 4.59 a.m. local time, after adding 8.1 percent yesterday.

Net profit was CNY48.9 billion (USD6.7 billion) in the three months ended Dec. 31, the Hangzhou-based company said in an earnings report yesterday. Revenue rose 8 percent to CNY280.2 billion (USD38.4 billion).

Revenue from Taobao and Tmall Group jumped 9 percent to CNY100.8 billion, driven by the growth in online gross merchandise volume and better take rates. Meanwhile, Alibaba International Digital Commerce Group saw a 32 percent increase in revenue to CNY37.8 billion, mainly thanks to robust cross-border business.

Income from Alibaba Cloud Intelligence Group, its cloud computing and AI division, climbed 13 percent to CNY31.7 billion, with AI-related products achieving triple-digit growth for the sixth consecutive quarter. More than 290,000 firms and developers have accessed the application programming interface of its Qwen AI model family through Alibaba Cloud's Bailian platform.

"We recently launched Qwen2.5-Max, our flagship AI foundation model, which has achieved industry-leading performance across multiple recognized benchmarks," Chief Executive Officer Eddie Wu told investors on Alibaba’s earnings conference call.

The company will soon release a deep reasoning model built on Qwen2.5-Max, he added.

"Over the past year, we have pursued our 'user-first, AI-driven' strategy and focused on our two core businesses of e-commerce and 'AI + Cloud,'" Wu noted. "After a year of transformation, our core businesses have demonstrated accelerating growth momentum.”

‘Aggressive’ AI Investment

"Looking ahead, Alibaba's strategic direction and roadmap are clearer than ever," Wu pointed out. "We will continue to focus on three business categories: domestic and international e-commerce, AI + cloud computing, and internet platform businesses. We are confident that our focused strategy will drive sustained solid growth for Alibaba Group.

“We will aggressively invest in AI infrastructure,” he noted, saying Alibaba will spend more on AI and cloud infrastructure in the next three years as it did over the past decade.

Alibaba's earnings report serves as a key indicator of China’s AI investment trends, according to Morgan Stanley.

A week ago, Alibaba also confirmed that it is partnering with Apple to develop AI features for the US company’s iPhones in China. “They want to use our AI to power their phones,” Chairman Joe Tsai said. “Apple has always been very selective, and it has held discussions with several companies in China. In the end, they chose to do business with us.”

Asset Disposals

As part of a strategic restructuring, Alibaba announced the disposal of its interests in omnichannel retailer Sun Art for as much as HKD12.3 billion (USD1.6 billion) and department store operator Intime for about CNY7.4 billion.

Executives clarified on the conference call that there are no plans to sell fresh food supermarket chain Freshippo, and said the company is open to bringing in strategic investors to better reflect the business's value.

Revenue at Cainiao Smart Logistics Network, a digital logistics platform set up by Alibaba, fell 1 percent to CNY28 million. That from Local Services Group jumped 12 percent to CNY17 billion, buoyed by growing orders for navigation service Amap and food delivery platform Ele.me. Income at Digital Media and Entertainment Group rose 8 percent to CNY5.4 billion.

Editor: Futura Costaglione