Alibaba Group Holding Limited (BABA) is reshuffling its logistics and autonomous driving operations, betting that consolidation will accelerate its push into self-driving delivery vehicles. The move comes as the company's cloud computing and artificial intelligence businesses continue generating the kind of growth that keeps investors interested.

Building a Self-Driving Delivery Powerhouse

According to a Wall Street Journal report published Thursday, Alibaba is merging the autonomous driving division of its logistics arm with Chinese robovan company Zelos Technology. The deal values the combined business at approximately $2 billion.

Here's how the structure works: Alibaba's Cainiao unit will acquire a stake in Zelos, which will then operate the merged entity going forward. The autonomous vehicle business currently embedded within Cainiao, Alibaba's e-commerce logistics subsidiary, will be folded into Zelos.

Despite the merger, the Cainiao Robovan brand will continue operating independently, and a Cainiao executive will join Zelos's board to maintain strategic alignment.

Stock Momentum Reflects Business Transformation

Alibaba shares have climbed 81% over the past twelve months, reflecting growing confidence in the company's cloud computing and AI capabilities alongside a stabilizing core e-commerce business.

The Chinese e-commerce giant reported fiscal second-quarter results on November 25 that comfortably beat analyst expectations. Revenue came in at $34.81 billion, up 5% year over year and ahead of the $34.43 billion consensus. On a like-for-like basis excluding divested businesses, revenue actually grew 15%.

Adjusted earnings reached 61 cents per ADS, easily surpassing the 49-cent estimate.

The catch? Profitability took a hit as Alibaba ramped up spending across multiple fronts. Adjusted net income dropped 72% to $1.45 billion, while adjusted EBITA fell 78% to $1.27 billion. The company has been pouring money into quick commerce, user experience improvements, acquisitions, and technology infrastructure.

Cloud and AI Drive the Growth Story

Breaking down the segments: China e-commerce revenue jumped 16% to $18.62 billion, supported by faster onboarding of Tmall brands and stronger demand for quick-commerce services. International commerce revenue increased 10% to $4.89 billion, with AliExpress driving growth through expanded local inventory.

The real standout was the Cloud Intelligence Group, which posted 34% revenue growth to $5.59 billion. Public cloud demand and accelerating AI adoption are the primary drivers behind that performance.

Nomura remains optimistic about Alibaba's AI trajectory, pointing to faster innovation cycles across China's broader technology sector. Analyst Shi Jialong noted that Alibaba is well positioned to capitalize on rising AI adoption and an expanding range of practical use cases.

BABA Price Action: Alibaba shares were up 0.93% at $177.30 during premarket trading on Thursday.