NewTimeSpace News: In the afternoon session of March 20, Hong Kong tech and internet stocks remained sluggish, with the Hang Seng Tech Index falling over 2%. Xiaomi plunged 7%, while Alibaba dropped over 6%. The Hang Seng Tech ETF (03032.HK) slumped nearly 2% in afternoon trade.

On the news front, Alibaba released its FY2026 Q3 earnings on March 19, with operating profit plummeting 74% year-on-year and adjusted EBITA declining 57% to RMB 23.397 billion, primarily due to increased investment in instant retail and technology initiatives. Non-GAAP net profit came in at RMB 16.71 billion, down 67% year-on-year. As a heavyweight constituent of the Hang Seng Tech Index, Alibaba's earnings report intensified market concerns over the sector's near-term earnings delivery capability, dragging the index lower.

According to HKEX data, the Hang Seng Tech ETF (03032.HK) tracks the Hang Seng Tech Index, which primarily invests in representative companies in Hong Kong's technology sector. The index covers 30 Hong Kong tech leaders, spanning both hardware and software, with deep exposure across the upstream, midstream, and downstream segments of the AI industry chain. Among them, Alibaba, Tencent, Xiaomi, Meituan, SMIC, and BYD are positioned to become the "Magnificent Seven" of Chinese tech stocks.

Huatai Securities believes that despite short-term resolute investments potentially causing volatility in the company's profitability, Alibaba—as the domestic leader in AI infrastructure—is expected to gradually convert early-stage investments into profit outcomes. This could drive Alibaba Cloud's profit margin further toward overseas cloud vendor levels, potentially reaching 20% at steady state.

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