PDD

Interested in PDD Holdings Inc. Sponsored ADR? Here are five stocks we like better. PDD Holdings beat earnings estimates on Aug. 24, but shares reversed course and closed lower as revenue growth of 8% missed expectations and net income fell by double digits. Heavy spending on merchant subsidies and AI shopping tools is squeezing profitability, raising concerns about whether PDD can sustain growth without sacrificing margins. Temu faces ongoing trade and regulatory pressure abroad, while intense e-commerce competition continues to pressure PDD closer to home. On paper, PDD Holdings Inc. (NASDAQ: PDD) gave investors plenty to cheer in its Aug. 24 earnings report, comfortably beating expectations on earnings. Shares of the Chinese e-commerce giant duly popped at the open, yet by the closing bell, that early enthusiasm had evaporated and the stock slipped into the red, a telling sign that all isn't quite as rosy as the headline beat suggested. A modest rebound in Aug. 25 trading did little to dispel the doubts. That muted response speaks volumes about the questions still hanging over the owner of budget shopping apps Pinduoduo and Temu. The shares remain down almost 25% for the year, and the failure to hold on to that post-earnings pop puts a nascent recovery, one that has seen the stock climb around 20% since late June, at risk of stalling. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? So why did a profit beat fail to win investors over? The answer lies not in the numbers the company beat, but in the ones it missed, and in the risks that refuse to go away. For starters, the results were far more mixed than the headline profit beat implies. While earnings came in ahead of forecasts, revenue fell short of expectations, growing a respectable but underwhelming 8% year on year. For a company long prized as a growth machine, a top-line miss is exactly the kind of thing to give investors pause. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding More troubling was the direction of net income. Despite the beat, the company's bottom line declined markedly from a year earlier, with net income falling by double digits. In other words, PDD is making less money than it was 12 months ago, even as its sales grow, a classic warning sign of a business under mounting cost pressure. That combination, slowing revenue growth paired with shrinking profits, gets to the heart of why the market hesitated: the company is continuing to spend heavily in pursuit of longer-term growth. → DICK's Sporting Goods Faces Pain Now for a Bigger Prize At the core of the bear case is exactly this erosion of profitability, as PDD plows money back into its platforms. The company is investing heavily in merchant subsidies and AI-powered shopping tools, and while that spending may support growth in the long run, it's clearly weighing on margins now. The worry is that the pressure only intensifies from here: should competition force PDD to keep spending to defend its position, profits could stay under strain for some time. For a stock whose appeal has long rested on turning growth into hefty profits, any sign that the formula is breaking down is bound to unsettle the market. Beyond the margin worries lies a thornier challenge: mounting regulatory scrutiny facing Temu, the group's fast-growing international arm. Management acknowledged the difficulty head-on, noting that the global trade and regulatory landscape has continued to shift, creating significant challenges even as it opens fresh opportunities. That careful language reflects a real overhang. Temu's meteoric rise was built in part on shipping ultra-cheap goods across borders, a model now squarely in regulators' sights. Changes to the rules on low-value imports, along with tighter customs enforcement and new tariffs, threaten to raise costs and complicate the very growth story that made Temu so compelling. If the international picture is clouded, the domestic one is no less fierce. Back in China, competition among the big e-commerce players has rarely been more intense, and the result has been a costly spending war that has squeezed margins across the sector. There is some comfort for PDD here, since compared with certain rivals, many of whose profits have taken an even heavier battering, the company has proven relatively resilient so far. But resilience is not immunity. As long as the price war rages, PDD may have to keep spending heavily to hold its ground, adding more pressure to the margins that investors are already fretting about. Weighing it all up, the market's tepid reaction makes sense. A profit beat is all well and good, but set against a revenue miss, falling profits, and a thicket of regulatory and competitive risks, it was never likely to spark a lasting rally on its own. The muted response looks less like an overreaction than a sober assessment of a decidedly mixed picture. That caution is shared more widely. Following the results, Deutsche Bank reiterated its Hold rating, a stance that chimes with the broader MarketBeat consensus rating of Hold. The message from both is one of watchful patience rather than conviction in either direction. For now, PDD finds itself in a familiar bind—cheap enough to tempt bargain hunters, yet saddled with enough uncertainty to keep the doubters at bay. Whether the recovery regains its footing will depend less on any single earnings beat than on whether the company can prove its profits, and not just its sales, are built to last. The article "PDD Beat Earnings—So Why Did the Stock Still Fall?" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Total Revenue: RMB112.4 billion, up 8% year-over-year. Online Marketing Services and Others Revenue: RMB57.6 billion, compared with RMB55.7 billion in Q2 2025. Transaction Services Revenue: RMB54.7 billion, up 13% year-over-year. Cost of Revenues: RMB48 billion, up 5% from RMB45.9 billion in Q2 2025. GAAP Operating Expenses: RMB36.6 billion, up 13% from RMB32.3 billion in Q2 2025. Non-GAAP Operating Expenses: RMB35.3 billion, up from RMB30.4 billion in Q2 2025. Non-GAAP Sales and Marketing Expenses: RMB29.3 billion, up 10% year-over-year. Non-GAAP General and Administrative Expenses: RMB1.7 billion, versus RMB0.7 billion in Q2 2025. Non-GAAP Research and Development Expenses: RMB4.3 billion, up 40% year-over-year. GAAP Operating Profit: RMB27.8 billion, up 8% year-over-year. Non-GAAP Operating Profit: RMB29.1 billion, versus RMB27.7 billion in Q2 2025. Non-GAAP Operating Profit Margin: 26%, versus 27% in Q2 2025. Net Income Attributable to Ordinary Shareholders: RMB27.2 billion, down 12% from RMB30.8 billion in Q2 2025. Basic Earnings per ADS: RMB19.32, versus RMB22.01 in Q2 2025. Diluted Earnings per ADS: RMB18.45, versus RMB20.75 in Q2 2025. Non-GAAP Net Income Attributable to Ordinary Shareholders: RMB28.5 billion, versus RMB32.7 billion in Q2 2025. Non-GAAP Diluted Earnings per ADS: RMB19.33, versus RMB22.07 in Q2 2025. Net Cash Generated from Operating Activities: RMB25.7 billion, versus RMB21.6 billion in Q2 2025. Cash, Cash Equivalents and Short-Term Investments: RMB156.4 billion as of June 30, 2026. Warning! GuruFocus has detected 2 Warning Sign with PDD. Is PDD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 24, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. PDD Holdings Inc (NASDAQ:PDD) reported a solid 8% year-over-year revenue increase to RMB112.4 billion in Q2 2026, driven by a 13% rise in transaction services revenue. The company's CNY100 billion support program is yielding tangible results, with merchants in industrial belts achieving significant gains in quality and efficiency, such as a cosmetics company in Guangdong reducing costs and launching patented brands. PDD Holdings Inc (NASDAQ:PDD) is making strategic investments in supply chain and logistics, including the free shipping to villages program, which has established last-mile delivery networks across more than 10 provinces, unlocking demand in rural areas. The company is committed to enhancing platform governance, having introduced over 150 comprehensive trust and safety measures in June alone, which strengthens consumer trust and long-term ecosystem health. PDD Holdings Inc (NASDAQ:PDD) maintains a strong cash position with RMB156.4 billion in cash and equivalents, and operating cash flow increased to RMB25.7 billion, providing ample resources for continued investment. The first-party brand model, though slower than expected, is progressing smoothly and is a clear long-term strategic priority, with a focus on core product categories and collaboration with manufacturers. PDD Holdings Inc (NASDAQ:PDD) is actively adapting to global regulatory changes, such as EU customs duties, by accelerating local merchant onboarding and building local warehousing, which will strengthen supply chain resilience over the medium to long term. PDD Holdings Inc (NASDAQ:PDD)'s net income declined 12% year-over-year to RMB27.2 billion, reflecting increased investments in platform and industry ecosystems that weighed on profitability. The initial rollout of the first-party brand model was slower than expected due to external factors, indicating potential execution challenges in this new initiative. Cross-border orders in affected markets, particularly the EU, will face lower fulfillment efficiency and higher costs in the short term due to new customs duties, which will have a considerable impact on parts of the business. Non-GAAP operating expenses increased 13% year-over-year, with R&D expenses up 40%, indicating rising cost pressures that could impact future margins. The company faces intense competition in the e-commerce industry, which places greater demands on platform governance and industry development, presenting ongoing challenges. PDD Holdings Inc (NASDAQ:PDD) has chosen not to invest in quick commerce, which may limit its ability to capture shifts in consumer behavior toward same-day delivery, potentially affecting market share in certain segments. The company's heavy investment in supply chain and governance initiatives may not yield immediate results, and management acknowledges that building a healthier merchant ecosystem takes time, which could delay revenue growth. Q: What is the expected impact of the EU's new temporary customs duty on low-value cross-border consignments, and what is the company's growth strategy for its global business in light of these policy headwinds?A: Chen Lei, Co-Chairman and Co-CEO, stated that the regulatory landscape has shifted significantly, creating both challenges and opportunities. The company is actively assessing and adapting to the EU customs changes by adjusting its supply chain and optimizing fulfillment processes. In the short term, cross-border orders in affected markets will face lower fulfillment efficiency and higher costs, which will have a considerable impact. However, over the medium to long term, the platform will onboard more high-quality local merchants to broaden local product supply and accelerate the build-out of local warehousing and fulfillment infrastructure. The company remains confident in its execution capabilities and organizational resilience, emphasizing that short-term volatility will not change the long-term direction of its global business. Q: Can management provide an update on the rollout and progress of the first-party brand business announced last quarter, and how should investors frame its potential impact on the company?A: Jiazhen Zhao, Co-Chairman and Co-CEO, explained that the first-party brand business is an important extension of long-term supply chain investments. The initial rollout was slower than expected due to external factors, but operations are now fully underway and progressing smoothly. The company will focus selectively on core product categories where its platform and supply chain capabilities provide distinctive advantages, working with manufacturers from product planning and R&D to setting quality standards. Management emphasized that the commitment to maintaining an open and fair marketplace will not change, and first-party brand products will complement third-party merchant offerings to meet consumers' diverse needs. Q: How should we think about the company's investment priorities in warehousing and delivery capabilities, especially as global e-commerce companies invest heavily in their own networks?A: Jiazhen Zhao stated that logistics and fulfillment investments are guided by the need to improve consumer experience and address practical merchant challenges. Investment priorities vary across markets. In the domestic market, the focus is on last-mile delivery in remote Western regions and rural communities through the "free shipping to villages" initiative, which has established local service stations covering all 177 villages in one region, increasing parcels delivered to villages to more than 100,000 per day. In certain overseas markets, the company invests targetedly in transit warehouses to help local merchants streamline fulfillment and lower logistics barriers. The approach remains practical and solution-oriented, aiming to create a virtuous cycle between supply and demand. Q: How does management assess the potential impact of quick commerce on the industry competitive landscape, and what strategy is the company pursuing to defend its market share?A: Jiazhen Zhao noted that quick commerce serves different consumer needs and use cases compared to core e-commerce, with limited synergies in supply chain requirements and operating models. The company has chosen to focus resources on areas where it has established strength. The current supply chain investments have two complementary priorities: ensuring a strong supply of quality products through initiatives like "new quality supply" and "total premium produce," and building infrastructure to deliver them efficiently through projects like "free shipping to villages." These investments may not yield immediate results but are expected to create tangible long-term value for the industry, consumers, and the merchant ecosystem. Q: Following the RMB100 billion support program, can management provide an update on the health and activity of the merchant ecosystem, and are you seeing a corresponding increase in merchants' willingness to spend on advertising?A: Jiazhen Zhao reported that the program is starting to show results, with resources reaching major regions and manufacturing clusters. Examples include a cosmetics company in Guangdong that reduced customer acquisition costs and reinvested profits in R&D to transition into patented national brands, and merchants in a lighting manufacturing belt that leveraged the platform's fast product testing to launch best-selling products generating several millions in sales within months. The program is focused on improving product quality, strengthening the supply chain, and supporting the merchant ecosystem. Over the long term, lower operating costs, stronger profitability, and greater business confidence among merchants will drive sustainable organic value creation across the platform. Q: Based on first-half trends, how are you thinking about the consumer spending outlook for the full year, and can platform revenue outgrow the broader consumer market?A: Liu Jun, Financial Director, stated that China's consumer market expanded steadily in the first half, with online retail penetration continuing to grow. The company remains confident in the long-term potential of the consumer market and e-commerce industry. Platforms need to take a proactive role in unlocking growth by addressing supply chain bottlenecks, such as through the "free shipping to villages" initiative, which is strengthening rural commerce and stimulating demand. In the first half, retail sales in rural areas grew faster than the overall market. On monetization, the company remains focused on strengthening the platform ecosystem and helping merchants grow, believing that sustainable growth in the platform's intrinsic value will follow from getting these fundamentals right. Q: What were the key financial results for the second quarter of 2026?A: Liu Jun reported total revenues increased 8% year-over-year to RMB112.4 billion, driven by a 13% increase in transaction services revenue to RMB54.7 billion. Online marketing services revenue was RMB57.6 billion. Net income attributable to ordinary shareholders was RMB27.2 billion, down 12% year-over-year, reflecting continued investments in the platform and industry ecosystem. Non-GAAP net income was RMB28.5 billion. Non-GAAP R&D expenses increased 40% year-over-year to RMB4.3 billion, reflecting significant investment in platform governance. Net cash generated from operating activities was RMB25.7 billion, and the company held RMB156.4 billion in cash, cash equivalents, and short-term investments as of June 30, 2026. Q: What specific governance measures has the company implemented to improve platform safety and trust?A: Jiazhen Zhao detailed that the platform has introduced more than 150 comprehensive trust and safety measures, with over 50 targeted initiatives launched in June alone. These address product listing controls, food and drug safety, qualification reviews, advertising compliance, intellectual property protection, misleading marketing, live stream e-commerce standards, and prevention of technology misuse. The company launched a dedicated food safety initiative prohibiting the sale of freshly prepared food and beverage products, tightened merchant qualification reviews, and introduced detailed requirements for live streaming food sales. The company also produced video courses addressing common governance challenges, with one course on store business licenses receiving 340,000 views within 24 hours of launch. Q: How is the company's "free shipping to villages" program performing, and what impact has For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in PDD Holdings Inc. Sponsored ADR? Here are five stocks we like better. PDD’s Q2 revenue rose 8% to RMB112.4 billion, led by a 13% increase in transaction-services revenue to RMB54.7 billion. Net income attributable to shareholders fell 12% to RMB27.2 billion as higher investments reduced profitability. The company is continuing its RMB100 billion support program, expanding merchant assistance, trust-and-safety measures, supply-chain development and rural delivery networks. These initiatives contributed to a 40% increase in non-GAAP R&D spending and a decline in non-GAAP operating margin to 26% from 27%. PDD expects regulatory changes, including new EU duties on low-value shipments, to raise costs for its international business, prompting greater use of local merchants and warehouses. It also plans to keep developing selective first-party brands while focusing on core e-commerce and logistics rather than quick commerce. Has Temu-Owner PDD's Story Changed After Double Miss? PDD (NASDAQ:PDD) reported second-quarter 2026 revenue growth of 8% as the e-commerce company continued to increase investment in platform governance, merchant support, supply-chain development and rural logistics. Net income declined as those investments weighed on profitability. Revenue for the quarter ended June 30 was RMB112.4 billion, while net income attributable to ordinary shareholders was RMB27.2 billion, down 12% from a year earlier. Co-Chairman and Co-Chief Executive Officer Zhao Jiazhen said the company’s performance remained steady, but that continued investment in its platform and broader industry ecosystem affected quarterly results. → 3 Beaten-Down Stocks That Haven’t Gotten the Message About the S&P 500’s Record Run MarketBeat Week in Review – 03/30 - 04/03 Financial Director Jiong Li said transaction-services revenue increased 13% year over year to RMB54.7 billion. Revenue from online marketing services and other sources was RMB57.6 billion, compared with RMB55.7 billion in the same quarter of 2025. Total cost of revenue rose 5% to RMB48 billion. On a GAAP basis, operating expenses increased 13% to RMB36.6 billion. Research and development expense, measured on a non-GAAP basis, climbed 40% year over year to RMB4.3 billion, while non-GAAP sales and marketing expenses increased 10% to RMB29.3 billion. GAAP operating profit increased 8% to RMB27.8 billion. Non-GAAP operating profit was RMB29.1 billion, compared with RMB27.7 billion a year earlier. Non-GAAP operating margin was 26%, versus 27% in the prior-year quarter. Diluted earnings per ADS were RMB18.45 on a GAAP basis, down from RMB20.75 a year earlier. Net cash generated from operating activities rose to RMB25.7 billion from RMB21.6 billion. → 3 Stocks Came Roaring Back—Now They’re Flashing Warning Signs Down 25%, Chinese Giant PDD Could Be a Strong Long-Term Value As of June 30, PDD had RMB456.4 billion in cash equivalents and short-term investments. Zhao said PDD’s RMB100 billion support program has entered a phase in which sustained investment is beginning to produce results across the platform’s supply and demand ecosystem. The initiative includes fee reductions, merchant support and programs aimed at agricultural regions and manufacturing clusters. → 2 Biotech Stocks Shaping Up for Major Breakouts The company said it has introduced more than 150 comprehensive trust-and-safety measures to date, including more than 50 targeted initiatives in June. Those measures addressed product-listing controls, food and drug safety, merchant qualification reviews, advertising compliance, intellectual-property protection, misleading marketing and livestream e-commerce standards. PDD also said it has increased R&D spending on risk-control systems and expanded specialist trust-and-safety teams. In food safety, the company said it prohibited the sale of freshly prepared food and beverage products, while tightening merchant-review and product-information requirements. The support program has extended to agricultural areas through the company’s Duoduo Premium Produce Initiative, which has worked with specialty-producing regions on product development, cultivation standards and cold-chain logistics. Zhao cited Hainan’s Golden Diamond pineapple as an example, saying local planting area for the variety had expanded to more than 100,000 mu from initially scattered trial plots. In manufacturing regions, PDD said it is helping merchants with traffic exposure, data tools, market expansion, cost reductions, smart manufacturing and warehousing upgrades. Zhao said some factories supported through these efforts had cut production cycles in half and improved fulfillment capacity. PDD said its free-shipping-to-villages program, launched six months ago, has established last-mile networks in more than 10 provinces and municipalities, including county-level transit hubs and village pickup points. The company said the program is intended to broaden rural access to consumer goods, appliances, agricultural supplies and farming equipment while creating jobs in counties and rural communities. During the question-and-answer session, Zhao said e-commerce logistics are relatively mature across much of China but last-mile delivery remains a bottleneck in remote western areas and rural communities. He said the company would continue making targeted, practical investments to improve fulfillment reliability and address those gaps. Zhao also said PDD does not currently see significant synergies between its core e-commerce and grocery businesses and quick commerce, given differences in supply-chain requirements and operating models. Rather than pursuing that area, the company plans to focus resources on improving product supply and delivery infrastructure where it believes it has established strengths. Co-Chairman and Co-Chief Executive Officer Chen Lei said changes in global regulatory and compliance requirements have created both challenges and opportunities for PDD’s international business. Addressing a question about new European Union customs duties on low-value cross-border shipments, Chen said affected markets would face lower fulfillment efficiency and higher costs in the short term, which would have a considerable impact on those businesses. In response, PDD is adjusting supply chains, optimizing fulfillment processes, onboarding more local merchants and accelerating local warehousing and fulfillment infrastructure, Chen said. The company also plans to continue strengthening product quality, consumer protection and intellectual-property compliance. Zhao provided an update on PDD’s first-party brand initiative, describing it as an extension of the company’s long-term supply-chain investment. The business will selectively focus on product categories where PDD and its supply-chain partners have advantages, working with manufacturers on product planning, research and development, quality standards and market testing. He said the initial rollout has taken longer than expected, but remains a long-term strategic priority. PDD’s first-party products will complement, rather than replace, offerings from third-party merchants, Zhao said, with both intended to serve different consumer use cases and market segments. Looking ahead, Li said PDD remains confident in the long-term potential of China’s consumer market and e-commerce industry. He said the company’s focus remains on strengthening its merchant ecosystem and supply chain, with the expectation that sustainable growth in the platform’s intrinsic value will follow over time. PDD (NASDAQ: PDD) is the holding company best known for operating Pinduoduo, a China-based, mobile-first e-commerce platform that emphasizes interactive, social shopping and group-buying mechanics to drive user engagement and low prices. Founded in 2015 by entrepreneur Colin Huang, the business has grown by connecting consumers directly with merchants and manufacturers, with particular emphasis on value-oriented goods and fresh agricultural produce. The company is based in Shanghai and completed a U.S. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "PDD Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. PDD Holdings has delivered a steep share price decline over the past year while its valuation checks still lean on the cheap side. That mix of weaker recent returns and relatively low multiples is putting the focus on whether the stock offers value or simply reflects growing concern about earnings quality. The share price is down 28.4% over the past year, which suggests investors have been reassessing how much they are willing to pay for PDD Holdings at its current fundamentals. Expectations for strong revenue growth can support the current valuation, while ongoing pressure on margins and earnings may limit how much investors are willing to re rate the stock. PDD Holdings screens as attractively priced on several checks, with 5 out of 6 valuation metrics pointing to undervaluation relative to its fundamentals. The stock's next move may depend on whether the recent share price weakness already reflects the margin risks, or if the current multiples still leave room for further de rating. Find out why PDD Holdings' -28.4% return over the last year is lagging behind its peers. The P/E ratio is a useful way to see what the market is currently paying for each unit of PDD Holdings earnings. Right now the stock trades on a P/E of 8.5x, which sits well below the Multiline Retail industry average of 19.9x and also under the peer group average of 33.7x. That is a wide gap for a large listed retailer that is still drawing close attention for its revenue trends. The fair P/E ratio, which folds in PDD Holdings size, sector, risk profile and earnings characteristics, is estimated at 26.1x. This is more than triple the current market multiple. Despite the recent news flow highlighting strong revenue expectations but continued margin pressure, the valuation suggests investors are applying a heavy discount to the stock relative to what this framework indicates. On this P/E yardstick, PDD Holdings stock appears undervalued compared with both its sector and its own modelled fair multiple. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for PDD Holdings pick up where the P/E discussion leaves off and explain which potential paths for PDD Holdings' growth, margins and earnings would justify a higher or lower price than today. Each narrative links its number to a clear view on how growth, profitability and risks might evolve, giving you a reference point you can return to as new information on the stock becomes available through the Community page. Community views on PDD Holdings now split between a long term investment cycle paying off and mounting costs and regulation capping the upside. Bull case: 27% undervalued Read the full Bull Case to see why PDD Holdings could be undervalued Bear case: 6% overvalued Read the full Bear Case to see why PDD Holdings could be overvalued Do you think there's more to the story for PDD Holdings? Head over to our Community to see what others are saying! PDD Holdings screens as undervalued on market multiples, with a clear discount to sector peers and to its own modelled fair P/E. The strong overall valuation checks suggest the current price already bakes in a fair amount of concern about margins and earnings quality. For you, the key question is whether that discount reflects temporary pressure that can ease, or whether it signals a more persistent squeeze on profitability that keeps the stock cheap for longer. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PDD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Alibaba (BABA) jumped 9% and Baidu (BIDU) gained 5% as traders rotated out of South Korean and Taiwanese chipmakers into beaten-down Chinese tech. A pre-earnings briefing showing narrowing instant-commerce losses sparked the Alibaba move, after that unit drove EBITA down 84% to $740 million last quarter. Alibaba's Cloud Intelligence Group revenue grew 38% and AI-related revenue hit 30% of external cloud sales, reinforcing the bull case ahead of August 17 earnings. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Alibaba didn't make the cut. Grab the names FREE today. Shares of Alibaba (NYSE:BABA) are up 9% to $106 and change in early Wednesday trading, leading a broad rally in Chinese internet and e-commerce names. Alibaba stock closed at $98.14 on Tuesday, and even after this morning's pop the shares remain down 28% year to date. The move extends well beyond Alibaba. Baidu (NASDAQ:BIDU) shares are up 5% to $117.99, JD.com (NASDAQ:JD) shares are up 3% to $27.40, and PDD Holdings (NASDAQ:PDD) shares are up 2% to $84. Alibaba's Hong Kong-listed shares climbed as much as 12%, the biggest jump since September. Traders are rotating into beaten-down Chinese mega-caps after a sharp selloff in South Korea and Taiwan chipmakers, with the Kospi falling 5%. That regional shuffle is doing a lot of the work today, layered on top of a stock-specific catalyst at Alibaba. The specific spark came from a pre-earnings analyst briefing indicating that losses in Alibaba's highly competitive instant-commerce business narrowed last quarter, while overall profitability held steady. The report was first surfaced by local outlet Jiemian, and it landed in a market already primed for good news out of China. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Alibaba didn't make the cut. Grab the names FREE today. That matters because instant commerce has been the biggest drag on Alibaba's margins. The company's fiscal Q4 2026 report on May 13 showed adjusted earnings before interest, taxes, and amortization (EBITA) dropping 84% to $740 million on a $123 million operating loss, even as revenue grew to $35.3 billion. Any signal that the losses are slowing down changes the setup into the next earnings report. The AI and cloud story remains the other pillar of the bull case for Alibaba. The company's Cloud Intelligence Group revenue grew 38% last quarter, and AI-related product revenue reached 30% of external cloud revenue for the 11th consecutive quarter of triple-digit AI growth. Alibaba CEO Eddie Wu has been emphatic about full-stack AI investment as the strategic priority. Baidu, JD.com, and PDD Holdings are moving in sympathy rather than on company-specific news. The rotation trade is being driven by valuation; all three of these stocks are in the red on a year-to-date basis in 2026, leaving them well below where the group started the year. Baidu still has an AI cloud narrative that fits the day's positive Chinese-AI sentiment. Reports that DeepSeek and Zhipu are each developing their own AI chips gave the whole space a lift. Baidu's Q1 2026 report showed AI Cloud Infra revenue up 79% year over year with GPU Cloud revenue up 184%, and Apollo Go, its robotaxi service, is live in 27 cities. JD.com and PDD Holdings are the pure e-commerce plays getting swept up in the rally. JD.com posted Q1 2026 revenue of $45.8 billion with JD Retail operating margin improving to 5.6%, and it launched the Joybuy platform across Europe on March 16. PDD Holdings, owner of Pinduoduo and Temu, delivered Q1 2026 revenue of $15.6 billion but missed on the bottom line as investment losses hit net income. The bull case on Alibaba is straightforward. Instant-commerce losses look to be narrowing, valuations across Chinese tech are cheap after steep declines, and renewed interest in Chinese AI adds a fresh growth angle. Reddit sentiment on Alibaba has actually been bearish over the past week, with sentiment scores of 12 to 25, which some traders read as capitulation ahead of a bounce. The bear case hasn't gone away, though. Chinese equities face persistent macro and regulatory pressure, instant commerce remains intensely competitive and structurally loss-making, and a single session of aggressive rotation can reverse just as fast. A one-day trade doesn't change the long-term thesis on Alibaba or any of its peers, and investors may want to size their positions accordingly. The next major catalyst for Alibaba is the fiscal Q2 2026 earnings report, currently scheduled for August 17 before the market opens. That report will confirm or refute the narrowing-losses thesis that powered this morning's move, and it lands with the stock already off its recent lows. Market watchers can also check for whether Baidu, JD.com, and PDD Holdings shares hold their gains into Wednesday's close. If the rotation is real, follow-through on Thursday matters more than any single morning pop. Cautious, modest position sizing makes sense given how quickly prior Chinese tech rallies have unwound in past cycles. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Alibaba didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

This article first appeared on GuruFocus. Total Revenue: RMB106.2 billion, up 11% year-over-year. Revenue from Transaction Services: RMB56.3 billion, a 20% increase from the same quarter last year. Revenue from Online Marketing Services and Others: RMB49.9 billion, compared to RMB48.7 billion in the same quarter of 2025. Total Cost of Revenues: RMB46.9 billion, a 15% increase from RMB40.9 billion in Q1 2025. GAAP Operating Profit: RMB19.6 billion, up 22% year-over-year. Non-GAAP Operating Profit: RMB21.1 billion, compared to RMB18.3 billion in the same quarter last year. Non-GAAP Operating Profit Margin: 20%, compared to 19% in the same quarter last year. Net Income Attributable to Ordinary Shareholders: RMB12.5 billion, compared to RMB14.7 billion in the same quarter last year. Basic Earnings per ADS: RMB8.94, compared to RMB10.5 in the same quarter of 2025. Diluted Earnings per ADS: RMB8.48, compared to RMB9.94 in the same quarter of 2025. Non-GAAP Net Income Attributable to Ordinary Shareholders: RMB14.1 billion, compared to RMB16.9 billion in the same quarter last year. Non-GAAP Diluted Earnings per ADS: RMB9.51, compared to RMB11.4 in the same quarter of 2025. Net Cash Generated from Operating Activities: RMB16.4 billion, compared to RMB15.5 billion in the same quarter last year. Cash, Cash Equivalents, and Short-term Investments: RMB436.1 billion as of March 31, 2026. Warning! GuruFocus has detected 3 Warning Sign with PDD. Is PDD fairly valued? Test your thesis with our free DCF calculator. Release Date: May 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. PDD Holdings Inc (NASDAQ:PDD) reported a year-over-year revenue increase of 11% to RMB106.2 billion, driven by growth in transaction services. The company is making steady progress in its first-party brand business, with a dedicated company established and an initial cash injection of RMB15 billion. PDD Holdings Inc (NASDAQ:PDD) is enhancing its supply chain through innovative models and investments, aiming to consolidate resources and incubate new brands. The company is expanding its logistics support to rural areas, reducing shipping costs significantly and increasing order volumes to remote regions. PDD Holdings Inc (NASDAQ:PDD) is committed to long-term value creation, focusing on sustained investments in the ecosystem and supply chain rather than short-term results. Despite revenue growth, PDD Holdings Inc (NASDAQ:PDD) experienced a decline in net income attributable to ordinary shareholders, from RMB14.7 billion to RMB12.5 billion. The company's online marketing service growth rate slowed in the first quarter, despite a solid consumption growth backdrop. PDD Holdings Inc (NASDAQ:PDD) faces challenges in the supply chain, with many manufacturers constrained by factors such as talent and scale, impacting brand transformation. The company reported an increase in total cost of revenues by 15%, driven by higher fulfillment fees, bandwidth, server costs, and payment processing fees. There is a fluctuation in overall profit margin, with non-GAAP net income decreasing from RMB16.9 billion to RMB14.1 billion year-over-year. Q: The company launched a new first-party brand initiative last quarter. Could management elaborate on the key considerations behind this move? A: Jiazhen Zhao, Co-Chief Executive Officer, explained that the initiative is part of a broader strategy to address supply chain challenges and drive high-quality growth. The first-party brand model aims to consolidate platform resources and take a more active role in product development, providing certainty for manufacturers and enhancing supply chain efficiency. Q: What will be the primary focus for PDD's global business moving forward, and how does the company plan to retain and service consumers? A: Lei Chen, Chairman and Co-Chief Executive Officer, stated that the focus will be on integrating and optimizing the supply chain to enhance product offerings and consumer experience. The company will also deepen the development of the first-party brand model to strengthen consumer mindshare and improve product quality standards. Q: How does PDD plan to allocate the EUR 100 billion investment for the first-party brand initiative, and when will it reflect in financials? A: Jiazhen Zhao highlighted that the investment will focus on building capabilities in product design, manufacturing, and quality control. The initiative aims to empower manufacturers to invest in R&D and process innovation, creating a win-win situation for the industry. The impact on financials will be seen as the initiative progresses. Q: How does PDD assess the impact of new e-commerce models like live streaming on the industry, and are there plans to expand into these areas? A: Jiazhen Zhao noted that while new models are emerging, the core competition remains in supply chain capabilities. PDD is focused on investing in supply chain initiatives, including the first-party brand business, to create unique value and navigate the evolving industry landscape. Q: What are the expectations for future growth in GMV and online marketing services given the current market conditions? A: Jiazhen Zhao emphasized that the online retail market holds great potential, but sustainable growth requires empowering the supply chain. PDD is investing in initiatives like logistics support for remote regions to unlock further growth and bridge the gap between supply and demand. For the complete transcript of the earnings call, please refer to the full earnings call transcript.