We recently published a list of 10 Best Bargain Stocks to Buy in May. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other best bargain stocks to buy in May.
While increasing tariffs and a hard sell-off have resulted in uncertainty, Neuberger Berman, an investment manager, expects that negotiations can bring some relief to initial tariff proposals. Furthermore, the firm anticipates a sharply slower growth than a US recession. Also, it believes that stimulus in Europe and China can rejuvenate global industrial activity, and the firm recommends styles, sectors, and regions that are most geared to it.
Investment Style- Where Do Opportunities Lie?
Given that a significant amount of tariff shock has now been priced in, Neuberger Berman is constructive on global equities for the remainder of the year. The firm expects that an ongoing recovery in the global industrial economy might be dampened but not derailed. The underlying momentum in the goods economy is expected to support equities that are most levered to it. Furthermore, the firm prefers value over growth (which is relatively expensive) and small caps over large caps. While an overdose of growth-inhibiting policy can impact the relatively healthy economy and push it into recession, the investment management firm believes that the US hasn’t yet reached that point. As per the firm, performance during the decline demonstrates relative strength in some of the more cyclical economic sectors in the US and around the world. The goods-oriented sectors, regions, and styles continue to outperform amidst the recent sell-off.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
What Lies Ahead?
S&P Global expects inflation to remain closer to 3.0% in 2025 as tariffs raise the prices along the domestic supply chain as well as for the end consumers. For 2026, the firm expects growth to pick up after a slow start. This is because of the abatement of uncertainty associated with the structure of tariffs and the further easing of the policy rate by the Federal Reserve. Also, the growth is expected to be aided partly because of a more favorable growth backdrop in the eurozone, which can help expand US exports.
Neuberger Berman opines that a combination of improving fundamentals and stabilizing risks increased the optimism in the energy sector. As per the firm, increased global industrial activity is expected to continue to buoy oil demand and keep prices aloft. Furthermore, energy seems to be the most undervalued sector in the S&P 500 relative to the current and expected earnings growth. The investment management firm believes that much of the negative news, including regulatory concerns and geopolitical risks, seem to be factored in. This suggests that energy stocks can increase as the sentiment improves.
Our Methodology
To list the 10 Best Bargain Stocks to Buy in May, we used a screener to shortlist the companies that trade at a forward P/E of less than ~20.0x. Next, we chose the ones that analysts see upside to, as of April 11. We also mentioned hedge fund sentiments around each stock, as of Q4 2024. Finally, the stocks were arranged in the ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An e-commerce platform displaying a wide range of products to customers online.
Alibaba Group Holding Limited (NYSE:BABA)
Forward P/E as of April 11: ~10.4x
Average Upside Potential: ~55.4%
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) provides internet infrastructure, electronic commerce, online financial, e-commerce, retail, as well as internet content services through global marketplaces, and offers entertainment, digital media, logistics, and cloud computing solutions. Citi analyst Alicia Yap reaffirmed a “Buy” rating on the company’s stock with the consistent price objective of $169.00. The analyst exhibited a favourable outlook on the latest AI advancements and expects that Alibaba Group Holding Limited (NYSE:BABA), together with other Chinese tech entities, will continue to expedite and refine technological progress over the coming months.
Alibaba Group Holding Limited (NYSE:BABA)’s emphasis on AI forms part of its broader strategy to remain at the forefront of technological innovation and to offer cutting-edge solutions to its clients. With the company continuing to invest in AI and other technologies, Citi remains optimistic about the stock. The AI integration across the platforms can result in enhanced operational efficiency, improved user experiences, and new revenue streams. Using AI to enhance e-commerce platforms can result in improved ad-tech capabilities.
Nightview Capital, an investment management company that concentrates exclusively on publicly traded equity strategies, published its Q4 2024 investor letter. Here is what the fund said:
“Artificial intelligence is no longer just a promise—it’s becoming the defining force of the modern economy. From self-driving vehicles to humanoid robotics, intelligent systems are not only enhancing efficiency but unlocking entirely new markets. These systems process and learn from vast amounts of real-world data, iterating and improving at a scale no human could achieve.
In our view, this isn’t just innovation; it’s exponential evolution. Companies leading the AI revolution are building formidable data moats, making it nearly impossible for latecomers to compete. Every mile driven by an autonomous vehicle, every task completed by an industrial robot—these actions feed a cycle of continuous improvement.
Industries like transportation, healthcare, and logistics are on the brink of massive disruption, and we believe this is a pivotal moment.
Alibaba Group Holding Limited (NYSE:BABA): Core Opportunity” Alibaba’s focus on stabilizing its core businesses, coupled with growth of its cloud and AI divisions, positions the company for a breakout. With 25% of its market cap in cash, We believe Alibaba offers a highly compelling risk / reward opportunity from a valuation perspective.
Competitive Advantage: Core Business Recovery: Alibaba’s e-commerce platforms, including Taobao with 930 million monthly active users, remain instrumental in China’s retail landscape. Revenue grew 5% YoY in the latest quarter, reflecting strategic improvements in user experience and pricing…” (Click here to read the full text)
Overall, BABA ranks 1st on our list of best bargain stocks to buy in May. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
