Alibaba Gets A New Boost From Surprise Star: Its Film Division

Even as AI supercharges growth, Alibaba Group Holding (BABA) is seeing momentum from another underappreciated corner of its empire: the movie business.

According to a Bloomberg News report, Damai Entertainment, formerly known as Alibaba Pictures Group, has seen its stock more than double in a month to emerge as the top performer on Hong Kong’s Hang Seng Composite Index.

The surge, which added $2 billion to its market valuation, comes after the company's pivot from movie production to intellectual property licensing and live events.

The change in focus was revealed in the company's earnings report on May 19, while the name change to Damai Entertainment, originally tied to its concert and event unit, took effect this month.

Alibaba is banking on a surge in consumption by younger audiences in China, including Gen Z, a trend Beijing is encouraging as part of its efforts to revive economic growth.

According to the Bloomberg report, Gen Z is spending on hobby goods and celebrity merchandise, fueling stock surges for companies like Pop Mart International Group and Bloks Group — and now Damai.

In the fiscal year ended March, the company's core film production business shrank. However, the company posted double-digit growth in both sales and profit, driven by its IP merchandising and live entertainment arms.

Damai Entertainment's IP merchandising unit has partnerships with brands such as Pokémon, Sanrio, and Chiikawa, and sublicenses these brands to merchants. The unit’s revenue grew 73% last year.

Several analysts have taken notice and increased their ratings on Damai, according to Bloomberg.

As of their last close, Alibaba's U.S. shares are up nearly 40% year to date.

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