HONG KONG — Alibaba Group Holding, the Chinese e-commerce giant, has reported its most rapid revenue growth in over a year, surpassing analysts’ expectations as it capitalizes on the artificial intelligence (AI) surge in China.

On Thursday, the company announced a revenue increase of 8% for the quarter ending in December, reaching 280.2 billion yuan (approximately $38.38 billion) compared to the same quarter last year.

Net income saw an impressive jump to 48.9 billion yuan (around $6.71 billion), prompting a more than 12% rise in Alibaba’s New York-traded shares after the earnings announcement.

During an earnings conference call, CEO Eddie Wu indicated that Alibaba plans to make substantial investments in artificial intelligence and cloud computing infrastructure over the next three years, with anticipated spending expected to surpass what the company has invested over the last decade.

Wu stated, “This quarter’s results reflect significant gains in our ‘user first, AI-driven’ initiatives and the revitalized growth of our core business operations.”

He noted that the company’s AI strategy focuses on pursuing artificial general intelligence (AGI), which refers to AI systems capable of matching or exceeding human intelligence and that can learn independently.

According to Wu, this opportunity for transformative change in the industry arises “once every several decades,” making AGI a primary objective for Alibaba.

The company’s ambitious AI initiatives come amidst intensifying competition in the AI sector between the U.S. and China. Recently, Chinese AI firm DeepSeek has generated buzz in the U.S. AI market by unveiling a model that competes with those developed by major American companies, even while utilizing more affordable hardware for training.

Headquartered in Hangzhou, Alibaba is one of many tech companies in China that are striving to take the lead in the AI arena. Earlier this January, the company launched its latest Qwen AI models, achieving impressive results in benchmark evaluations, positioning it among the top players in China’s AI sector.

Furthermore, Alibaba is collaborating with Apple to integrate its AI technology into iPhones sold in China, a development announced earlier this month.

The company has integrated AI features into its cloud services; the cloud division reported a 13% revenue increase compared to the same period last year, marking the fastest growth rate in nearly two years.

The international commerce segment, which includes platforms such as AliExpress and Lazada, experienced a robust revenue rise of 32%, fueled by strong performance in cross-border trades.

Alibaba was significantly impacted by regulatory challenges faced by several leading Chinese tech firms in 2020 when authorities halted the initial public offering of its financial subsidiary, Ant Group.

Additionally, the company was fined a historic $2.8 billion for breach of anti-monopoly regulations. The cofounder Jack Ma largely withdrew from public life, and Alibaba’s stock value declined sharply over the ensuing years.

However, recent trends suggest a shift in Beijing’s approach towards the tech sector as it aims for technological advancement and self-reliance amidst worsening relations with the U.S.

Recently, President Xi Jinping convened a private meeting with notable entrepreneurs, including Ma, which, alongside DeepSeek’s AI achievements, has rekindled interest in the Chinese technology landscape, leading to a surge in tech stocks over the past few weeks.

Consequently, Alibaba’s stock has increased by over 60% this year, with its U.S.-listed shares rising 8.5% in morning trading to reach $136.58.