Shares of Meitu Inc (HK:1357) soared to a seven-year high on Wednesday following the announcement of a strategic partnership with Alibaba Group (NYSE:BABA) (HK:9988) and a $250 million convertible bond issuance to Alibaba’s subsidiary.

The Hong Kong-listed tech firm, known for its photo-editing apps, saw its stock jump as much as 17.8% to HK$6.95, marking its highest level since June 2018. By 02:23 GMT, shares were trading at HK$6.24, still up 5.8% for the day.

Under the agreement, Meitu will work with Alibaba.com China Limited in the areas of e-commerce, AI technology, and cloud computing. A key component of the deal includes Meitu issuing convertible bonds with a 1% annual interest rate, maturing in three years. The initial conversion price is set at HK$6.00 per share, offering a premium over recent trading prices.

The partnership is aimed at integrating Meitu’s AI-powered imaging capabilities with Alibaba’s vast e-commerce ecosystem, enhancing product visualization and customer engagement. As part of the agreement, Meitu will also purchase RMB560 million (approximately $77.6 million) worth of Alibaba cloud services over the next three years, reinforcing its commitment to digital infrastructure and AI development.

Meanwhile, Alibaba’s Hong Kong-listed shares rose nearly 1%, reflecting investor optimism about the strategic alliance.

The collaboration is expected to boost Meitu’s technological capabilities and market reach while strengthening Alibaba’s AI and cloud ecosystem. The news has attracted significant investor attention, positioning both companies for potential long-term growth.

This strategic move highlights the growing synergy between AI and e-commerce in China’s tech landscape, where platforms are increasingly integrating advanced imaging and cloud technologies to drive innovation and user engagement.