10 Best Emerging Markets Stocks to Buy According to Hedge Funds

1. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 107

​​Alibaba Group Holding Limited (NYSE:BABA), based in China, is a multinational conglomerate operating across e-commerce, retail, internet, and technology sectors. Its core businesses include China Commerce, featuring platforms like Taobao and Tmall; International Commerce, through AliExpress and Lazada; and Local Consumer Services, such as food delivery. The company also runs Cainiao for logistics, Alibaba Cloud for cloud computing services, and digital media platforms like Youku. BABA ranked second on our recent list of 12 Best ADR Stocks to Buy According to Hedge Funds.

Alibaba Group Holding Limited (NYSE:BABA) showed strong momentum across its core businesses in 2024 following a year of transformation, driven by a user-first, AI-powered strategy centered on e-commerce and cloud services. The cloud division posted solid growth, with revenue (excluding Alibaba-consolidated subsidiaries) rising 11%, while AI-related product revenue continued to see triple-digit growth for the sixth straight quarter. In e-commerce, platforms like Taobao and Tmall recorded strong gains in both new users and order volumes, with customer management revenue increasing 9% YoY and VIP memberships growing to 49 million. The international e-commerce segment also maintained healthy growth, supported by greater operational efficiency, and AIDC is on track to report its first profitable quarter in the upcoming fiscal year.

Looking ahead, Alibaba Group Holding Limited (NYSE:BABA) plans to significantly scale up investments over the next three years in three key areas: AI and cloud infrastructure, foundational AI models and native applications, and integrating AI into its existing businesses. The company noted that planned spending in cloud and AI infrastructure will exceed its total investment in this area over the past decade. Financially, BABA remains on solid footing with a strong net cash position and continued efforts to streamline its balance sheet through asset divestitures, share repurchases, and prudent debt management.

Overall, Alibaba Group Holding Limited (NYSE:BABA) ranks first on our list of the 10 best emerging markets stocks to buy according to hedge funds. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Buy Now According to Billionaires.

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