In a display of growing confidence in Alibaba’s future, Bernstein has raised its rating on the tech giant from ‘market perform’ to ‘outperform’, alongside a significant increase in its price target from $104 to $165. This updated target suggests a promising upside of over 23% based on the stock’s recent closing price. The optimism is fueled by a remarkable surge in Alibaba’s shares, which have seen a rise of about 50% within the last month. This shift can be attributed in part to heightened concerns around artificial intelligence (AI) competition, particularly after the emergence of Deepseek, a Chinese startup offering low-cost, open-source AI models that have intensified rivalries in the tech sector.
Just this week, Alibaba’s stock experienced a further boost of more than 4% in pre-market trading. This uptick followed the company’s announcement to make its video generation AI models available for free, echoing the open-source strategy employed by Deepseek. The implications of such a move are significant, as it positions Alibaba to be a formidable player in the expanding AI landscape. As noted by analyst Robin Zhu, the climate around AI prospects aligns with the expectation of sustainable growth for Alibaba moving forward. He described the current dynamic as more favorable compared to traditional cloud models, suggesting that the infrastructure being built around AI could yield efficient capital deployment and a more positive trajectory for revenues.
This upbeat assessment comes on the heels of Alibaba’s impressive fourth-quarter results announced last week, which not only exceeded expectations but also sent stock prices soaring. Zhu articulated that while current market sentiment may seem like a peak for AI, the strategic decisions being made now—particularly focused on AI infrastructure over less productive ventures—indicate a strong potential for growth. He believes that Alibaba’s earnings will likely follow an upward trend, driven by robust investment in AI capabilities that are anticipated to bolster the company’s cloud computing wing, Alicloud.
Looking ahead, Zhu predicts the first half of 2025 will be critical for showcasing significant revenue growth within Alicloud. His analysis suggests that, as the narrative around Alibaba’s AI advancements continues to develop, investors may be inclined to purchase shares on any dips, driven by an appetite for the opportunities that AI presents. This perspective is echoed across Wall Street, where the majority of analysts maintain a bullish outlook on Alibaba’s stock. Out of 44 analysts, 39 hold a ‘strong buy’ or ‘buy’ rating, highlighting a broadly optimistic sentiment. The consensus price target of $150 reflects an implied 12.1% upside from recent prices, solidifying the view that Alibaba is well-positioned for remarkable growth.
Alibaba’s proactive approach to leveraging AI technology amidst a rapidly changing landscape has not only boosted its stock performance but has also attracted favorable analyst ratings and investor interest. With the strategic push toward open-source models and a clearer roadmap for growth, Alibaba is poised to capitalize on emerging opportunities within the AI domain, affirming its status as a leading player in the tech world.