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The logo for Alibaba Group Holding Ltd.’s cloud unit displayed on a banner during the Alibaba Cloud AI Tech Day event in Kuala Lumpur, Malaysia, on Thursday, Feb. 27, 2025. Samsul Said/Bloomberg Shares of Alibaba surged 18.5% in Hong Kong on Monday as investors were encouraged by Chinese web giant’s progress in AI and its core e-commerce business despite a sizzling price war in the food-delivery sector that is hurting its profitability. The Hangzhou-based behemoth now sports a market capitalization of HK$2.7 trillion ($346.5 billion) in the Asian financial hub. Its dual-listed shares rallied 13.5% in New York on Friday, after the company reported a strong set of results for the three months that ended in June. Cofounder Jack Ma, who stepped down from the helm in 2019 but still derives his net worth partly from a company stake, is now the country’s eighth richest man with a fortune of $28.3 billion, according to the Forbes Real-Time Billionaires list. Investors were wowed by Alibaba’s growth in AI. The company’s cloud computing arm, the Cloud Intelligence Group, reported a better-than-expected 26% rise in revenues to 33.4 billion yuan ($4.7 billion), while sales of AI-related products maintained triple-digit year-on-year growth in the quarter. Cloud revenue growth could accelerate over the next two years, amid strong demand for the company’s products that help to run AI-related services, Chelsey Tam, a Hong Kong-based analyst at research firm Morningstar, wrote in a September 1 research note. Wang Xiaoyan, a Shanghai-based analyst at research firm 86Research, says by WeChat that Alibaba’s investment in this area, which is more aggressive than peers, is helping to cement its lead. To investors, such progress offers ample reasons to overlook short-term pains like the company’s dip in profitability, says Wang. Alibaba’s income from operations decreased 3% year-on-year to 35 billion…