China Tech's Revival Starts With Alibaba: ETFs To Watch As The Dragon Wakes

After years of being the poster child for China’s regulatory reckoning, Alibaba BABA is now sending a different sort of signal to shareholders: It’s back, it’s profitable and it’s on the AI wave on a large scale. And for ETF investors, its return may be more than a BABA-centric tale, which might be a sign of a wider reawakening for China-centric tech ETFs.

The Numbers Don’t Lie, They Shout

Alibaba’s most recent quarterly earnings showed that the company’s revenue increased 7% year-over-year in the March quarter, which was a miss. However, operating income skyrocketed 93%, and adjusted EBITA jumped 36%. The jaw-dropping number? Net income expanded to $1.65 billion, an eye-opening 1,203% jump from the prior-year period. Even stripping out one-time gains, non-GAAP net income was up 22%.

The company has also stepped up expenses, cut share-based compensation in half, and streamlined its sprawling platforms—all while accelerating cash flow by 18%. For a company once seen as a regulatory landmine, Alibaba is now flexing financial discipline and strategic clarity.

Also Read: Alibaba Eyes Growth In Other Markets As US Ties Strained, Says Chairman

Alibaba’s Not-So-Secret Weapon

As e-commerce remains the company’s anchor business, Alibaba’s Cloud Intelligence Group is shaping up to be the next significant growth driver. The cloud unit increased revenue by 18% YoY to $4.15 billion, while adjusted EBITDA surged 69%. But the real news is what’s fueling that growth: artificial intelligence.

Alibaba has now reported seven straight quarters of triple-digit revenue growth from AI-driven cloud products. CEO Eddie Wu has referred to generative AI as the key driver here, a trend that international investors are following closely, particularly as AI emerges as the next wave across enterprise and consumer applications.

The ETF Implication: Who’s Holding The Bag (In A Good Way)?

For investors in ETFs who want to play Alibaba’s rebound without committing all to a single stock, there are many funds with significant exposure:

KraneShares CSI China Internet ETF KWEB

With 12% weighting in Alibaba, KWEB has been a favorite among those wagering on the Chinese internet rebound. The ETF also provides some exposure to Tencent TCEHY, JD.com JD, and Meituan, providing diversified access to the group.

Invesco Golden Dragon China ETF PGJ

This fund invests in U.S.-listed Chinese shares, such as Alibaba (8% weightage), and goes heavy on tech-heavy names. It provides a pure play for those interested in the innovation economy of China without having to contend with A-shares.

iShares MSCI China ETF MCHI

A more diversified China play and a significant position in Alibaba (~10%), MCHI may attract investors who want to mix tech with some exposure to financials, real estate, and industrials.

Not All Dragons Breathe Fire

While Alibaba’s Q4 results are certainly to be applauded, it’s not a decade of peace and prosperity on the China tech horizon. The larger China tech story is still susceptible to geopolitical stress, local regulator switches, and sentiment investor turns. ETFs can insulate single-stock risk but aren’t proof against macro headwinds.

Nevertheless, the green shoots are difficult to overlook. Following years of investor doubts, Alibaba’s robust quarter may be the catalyst China tech ETFs have been waiting for.

For ETF investors, particularly those who hold long positions in KWEB, PGJ, and MCHI, the last earnings call hinted that the tide could be turning for China tech. With AI traction, cloud profitability, and a solid core commerce engine, Alibaba no longer looks like a cautionary tale. The Alibaba stock is up 38% year-to-date.

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