Alibaba’s Growth Skyrockets as China’s Consumers Increase Spending

Jack Ma, Chairman of Alibaba reported that the company has a reported profit increase of 59 percent by June. Share price went up as much as 6.2 percent to $92.77 in New York, the most in more than three months.

The surge in Alibaba's profits beat analysts' expectations as Alibaba expanded e-commerce and cloud services. The company's investments on Lazada and UCWeb also paid off.

Li Muzhi, an analyst from Arete Research Services LLP said that many investors are now confident in Alibaba's ability to forge ahead in the e-commerce industry.

He said, "This quarter's performance lifts investors doubt about its ability to maintain growth in its core e-commerce business. The business diversification in digital entertainment and cloud is icing on the cake."

As China's economy shifts away from heavy industries, Alibaba wants to concentrate on the spending ability of its users who are under 35. These younger users account for 3 quarters of their profit, according to the company's vice-chairman, Joseph Tsai.

Ma intends to get more profits from investments outside e-commerce. He also plans to branch out to new sectors.

"While the other companies are talking about a billion investment, we are willing to invest multi times of that number," Chief Financial Officer Maggie Wu said.

Alibaba Cloud is the company's venture into cloud computing and is growing at a fast rate. The company foresees that they will be getting a majority of Japan's market in two years, as well as expansion to the Middle East.

Chief Executive Officer Daniel Zhang explained that the revenue of Alibaba will continue to rise as it invests in cloud technology, digital media, and entertainment.

"Our results show the scale and leverage of our ecosystem, as we strengthen our competitive positions in core commerce, cloud computing and digital media and entertainment," he said.

Alibaba's revenue from digital media and entertainment quadrupled to 3.1 billion yuan.