Cathie Wood has built its reputation by making bold, forward-looking bets. Her final step at Ark Invest – buying Alibaba(NYSE: BIBI) For the first time in four years – it has reignited US investor interest in one of China’s most followed companies. The purchase itself may have been relatively small, but it carried great symbolic weight.
Here’s what happened, what it indicates, and how investors should think about it.
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In late September, Wood’s Ark Invest bought about $16.3 million worth of Alibaba stock via two of its exchange-traded funds (ETFs) – approximately $8.18 million for ARK Fintech Innovation ETF(nesimct:arqf) And $8.1 million for ARK is the next generation of Internet ETFs(nesmect: arco)According to a report by SCMP.
It was Ark’s first investment in Alibaba since 2021, when global investors fled Chinese technology stocks due to regulatory pressures and geopolitical uncertainty. The size of the purchase was small compared to Ark’s total assets of more than $6.7 billion in assets under management, but the timing is critical.
The move, after years during which Ark has moved away from the stock, signals a belief that the company’s fundamentals and long-term operating environment have improved. Unsurprisingly, investors responded positively to news of the purchase. Following the revelation, Alibaba’s Hong Kong-listed shares rose nearly 9% to a four-year high. The reaction showed that investors are closely following Ark’s trades – and this market Feelings Towards Baba I started to turn.
Wood’s decision to add Alibaba back to her portfolio suggests that the worst is likely behind the tech company, and that the fund manager is now focused on its future.
First, Ark likely sees Alibaba as an AI story and a cloud growth story. Alibaba’s latest quarterly report showed cloud revenue rising 26% year-on-year to 33.4 billion yuan ($4.7 billion), a growth rate that significantly outpaces the group’s overall revenue growth of 10%. It has also posted triple-digit revenue growth for its AI-related products for eight consecutive quarters, and AI now accounts for more than 20% of Alibaba Cloud’s overseas sales.
This growth reflects more than just a rebound – it shows a structural shift towards higher-margin, AI-driven businesses. Thanks to Tongyi Qianwen’s large language model and AI-powered enterprise tools, Alibaba has evolved from a traditional cloud infrastructure provider into an AI platform.
Second, Ark’s move reflects a recovery in institutional investors’ confidence in Chinese technology. After years of strict regulatory measures, a small group of foreign investors are starting to return to a select group of Chinese stocks. By adding Alibaba, Wood effectively signaled that she views China’s policy environment toward the technology sector as more stable than it was a few years ago.
Third, Arc may view Alibaba as an asymmetric bet. Alibaba stock still trades at about 3.3 times sales, well below the peak multiple of over 15. If the AI and cloud units maintain their current momentum, the market could revalue the stock to a significantly higher multiple. For Ark, which strives to identify early turning points for leading technology companies, this setup offers an attractive balance of risk versus potential reward.
Wood’s move does not confirm that Alibaba has completed its transformation, but it does indicate that there has been a major shift in perception about the technology company. Investors can learn several lessons from this.
Buying Ark offers insight, not instructions. This suggests that Alibaba’s strategy – especially its transformation into artificial intelligence – now has greater credibility among global investors. However, each investor should evaluate a company’s progress independently, rather than reflecting money flows.
Investors should focus on how Alibaba turns cloud demand and AI adoption into profitability. Key indicators include cloud revenue and operating margin trends, AI revenue growth, and progress in inference chip development. How it succeeds on these fronts will determine whether Alibaba turns its strategic potential into sustainable financial results.
Alibaba’s exposure to China’s economic environment and regulatory situation, as well as aggressive competitors e.g PDD Holding and Meituanmeaning the road ahead is likely to remain bumpy. Investors should not expect a smooth path in the coming quarters.
Alibaba’s return to Ark Invest’s portfolio reflects more than just a portfolio adjustment — it represents a change in market perception of the company. For many years, Alibaba’s story has centered around its difficulties with Chinese regulators and the erosion of its competitive position. Now the focus has shifted towards AI-led growth, stabilizing e-commerce growth, and renewed institutional interest.
The company still faces risks. E-commerce margins remain under pressure, and China’s economic recovery remains uneven. However, Alibaba’s progress in cloud design, artificial intelligence and semiconductors provides it with new strategic tools for growth.
If Alibaba performs well and confidence continues to build, we could view this moment as marking the beginning of a new chapter for one of China’s most important companies.
Investors should monitor Alibaba’s evolving situation closely in the coming quarters.
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