1) Alibaba Group Holding Limited (NYSE:BABA)
% Gain on a YTD Basis: ~64.5%
Market cap as on March 6: ~$333.3 billion
Number of Hedge Fund Holders: 107
Benchmark analysts gave a “Buy” rating on Alibaba Group Holding Limited (NYSE:BABA)’s stock and the price objective of $190.00. The optimism stems from expected fundamental improvements throughout its core divisions, such as e-commerce, cloud computing, and Artificial Intelligence and Data Computing (AIDC). Furthermore, Benchmark has highlighted the potential impact of the acceleration of AI adoption in China, thanks to the breakthrough of DeepSeek, an AI technology. The analysts at the firm opine that Alibaba Group Holding Limited (NYSE:BABA) remains well-placed to benefit from the secular growth trend, potentially resulting in strong upside potential for the company’s stock.
Alibaba Group Holding Limited (NYSE:BABA)’s strong emphasis on AI can place it as a leader in next-gen cloud services and e-commerce solutions. Furthermore, the AI integration throughout the platforms can result in improved operational efficiency, enhanced user experiences, and new revenue streams. Also, Alibaba Group Holding Limited (NYSE:BABA)’s e-commerce platforms have demonstrated signs of improved monetization. Its vast user base and rich data resources offer significant opportunities for targeted advertising and value-added services.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Alibaba Group Holding Limited’s (NYSE:BABA) share price decline was primarily giving back the gains from the prior quarter. Recall that all Chinese stocks surged last quarter after the Chinese government unveiled an unanticipated stimulus that temporarily captivated investors. The reality of the undersized stimulus and the challenges facing the Chinese economy eventually prevailed, leading Chinese equities—including Alibaba—to come back down to earth. Despite our concerns about China’s economic outlook, which we outlined in detail in last quarter’s letter, shares of Alibaba still represent significant value. The company is a leading player in several attractive market segments. We believe management is doing the right things, such as selling off businesses and returning capital to shareholders. It has made several changes to management and strategy that we expect will return the business to healthy growth over the coming year. In our opinion, the valuation is depressed and does not reflect a fair value for a company with these attributes.”
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. 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 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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