On February 21, a notable surge was observed in the Hong Kong stock market, particularly following the enthusiastic performance exhibited by popular Chinese technology stocks on Wall Street the previous night. The Hang Seng Technology Index skyrocketed by 6.53%, showing a robust appetite among investors for tech companies as they displayed aggressive upward momentum.

Among the stars of this tech rally was Alibaba Group, represented by its stock, which experienced an impressive leap of 14.56%, closing at HKD 138.5 per share. This marked an astonishing increase of over 77% since mid-January, showcasing the strong bullish sentiment surrounding this giant.

The remarkable rise of tech stocks, exemplified by Alibaba, can be attributed to several underlying factors. First, the advent of DeepSeek-R1 introduced new expectations in the market. Major foreign financial institutions like Deutsche Bank, Goldman Sachs, and UBS shifted their outlook positively towards China's tech industry, sparking increased interest and investment in the technology sector.

In addition, Alibaba’s compelling financial performance, released recently, provided substantial support for its stock price escalation. The company's robust performance, coupled with its ambitious investments in artificial intelligence (AI), further fueled investors’ optimism. For instance, a significant announcement came from Alibaba on February 20 when it revealed that for the third quarter of its fiscal year 2025 (ending December 31, 2024), its revenue reached CNY 280.15 billion, showing an 8% year-over-year increase, while its net profit skyrocketed by 239% to CNY 48.945 billion.

Breaking down its performance by segments, Alibaba’s e-commerce business remained steady, with Taobao and Tmall reporting a 5% revenue growth year-over-year and adjusted EBITA showing a positive 2% growth. International operations saw a remarkable 32% revenue increase, though adjusted EBITA registered a loss of approximately CNY 4.952 billion, exacerbating from previous figures.

Moreover, cloud computing revenues experienced a year-over-year increase of 13%, a significant uptick compared to the preceding quarter's 7% and the prior year's 3%. Notably, the revenue from AI-related products marked continuous growth, achieving triple-digit increases over six consecutive quarters, indicating strong market demand driven by innovation.

One of the most notable aspects of Alibaba's latest financials was its increased capital expenditure, which soared to CNY 31.775 billion, reflecting an 80% quarter-over-quarter jump. This surge in capital commitments is indicative of Alibaba's aggressive strategy to bolster its AI capabilities and infrastructure, firmly establishing itself in a competitive landscape.

Alibaba's CEO, Wu Yongming, articulated the company’s strategy to focus intensively on AI over the next three years, proposing to invest more in AI infrastructure and advanced models than they have in the last decade combined. This ambitious plan places strong emphasis on innovation, aiming to strengthen Alibaba’s competitive edge within the sector.

Beyond Alibaba, the entire tech landscape is undergoing a significant transformation, notably regarding infrastructure investments in AI technologies. Giants such as Microsoft, Amazon, Google, and Meta have collectively expressed plans to expand their budgetary commitments to AI and data center development significantly, anticipating a total expenditure of $320 billion by 2025. This is an increase from their prior investments of $230 billion in 2024, illustrating the immense enthusiasm for AI technologies.

As these internet behemoths ramp up their capital expenditures, industry analysts forecast a trend toward localization and diversification of AI investments, anchored around inferencing in cloud computing while maintaining sustained excitement within the sector. Furthermore, the surge in AI-related applications demands heightened data processing and transmission capabilities, resulting in a growing interest in high-speed copper connections, drawing considerable attention from market stakeholders.

High-speed copper connections, known for their direct transmission of telecommunication signals through copper conductors, are being favored for their cost-effectiveness, speed, and energy efficiency, especially within data centers and high-performance computing realms. With the introduction of AI chips from companies like NVIDIA, such as the GB200, the demand for enhanced data transmission speeds and reliability has emerged, contributing to the rapid growth of the high-speed copper cable market.

Bloomberg and other financial institutions noted a steady increase in the sales of high-speed copper cables, which are essential for server connectivity and interconnects in decoupled switches and routers. A similar projection anticipates a compound annual growth rate of 25% for these cables from 2023 to 2027, with shipments forecasted to reach 20 million units by 2027.

The optimistic outlook for this market segment has translated into a heated interest in stocks related to high-speed copper connections. On February 21, the index tracking this concept surged by 3.11% in the A-share market, accumulating an impressive gain of 96.26% since late September of the previous year. Growth is also evident among specific companies involved in this sector, such as Yangtze Optical Fibre and Cable, which saw its stock price soar by 12.4%, marking an accumulated gain of over 63% this year.

With the broader tech industry and infrastructure commitments on the rise, the future appears bright for companies involved in AI and its supporting technologies. As investors keep a close eye on developments from industry titans, such as Alibaba’s strategic shifts and burgeoning market opportunities in AI applications, the vibrancy of the tech sector is expected to continue to flourish, driven by innovation and investment.