Alibaba’s chip bet is suddenly the cool kid

The market’s new favorite toy: chips

Alibaba is having a moment, and it’s not because everyone suddenly decided cloud computing was sexy. The stock jumped 11% this week after the company said it plans to list its chip unit, T-Head. That sounds nerdy, but in today’s AI market, “nerdy” is basically a love language.

Investors are chasing the companies that sit closer to the picks-and-shovels side of the AI boom — chips, infrastructure, cloud, the whole plumbing stack. Alibaba is getting credit for having its fingers in more than one cookie jar: chips, AI models, and cloud services.

Tencent’s doing AI too. The crowd just yawns.

Tencent was also trying to impress the market with a newer AI model, but the response was more shrug than standing ovation. Its shares only rose about 2% over the same stretch. Baidu, meanwhile, got a bigger pop too, climbing nearly 17% as investors warmed up to its chip exposure.

That’s the current AI trade in one sentence: if you help power the machine, Wall Street is interested. If you just build the machine’s brain, people want to see a little more proof.

The clock is ticking on earnings

There’s also a bigger test coming. Alibaba is set to report earnings on May 13, 2026, and expectations are already loaded:

• EPS is expected at $1.12, down from $1.73 a year ago
• Revenue is expected at $35.23 billion, up from $32.58 billion last year
• Analysts still broadly rate the stock a Buy, with an average target around $191.70

So yes, the chip buzz is doing a lot of heavy lifting right now. But earnings will decide whether this is a real rerating or just another AI-fueled sugar rush.

Big picture

For investors, the key question is simple: can Alibaba turn its AI-and-chip strategy into something the market can price like a growth story instead of a value trap? Right now, the crowd is leaning yes — but May 13 could quickly change the vibe.