China chip stocks rally on self-reliance bets, Nvidia scrutiny
On Monday, Susquehanna reiterated its Positive rating on Alibaba Group Holding Limited (NYSE:BABA) shares, maintaining a $175.00 price target. Trading at $123.46, BABA has shown strong momentum with a 45.61% gain year-to-date. The affirmation follows Alibaba’s fourth-quarter results, which presented a mixed performance with revenues falling short of expectations while profitability exceeded them.
Alibaba’s financial report indicated that despite the slight revenue miss, the company’s earnings were somewhat stronger than anticipated, with revenue growth of 5.86% and a healthy P/E ratio of 16.66. The e-commerce giant’s optimism is particularly notable regarding the potential of artificial intelligence (AI) and its strategic plans to increase investments in this area to boost greater adoption. InvestingPro analysis reveals 12+ additional key metrics that could impact BABA’s AI investment strategy.
Susquehanna’s analysis highlights Alibaba’s strong market position within China’s e-commerce landscape, with a substantial market capitalization of $280.19 billion. The firm’s analyst pointed out the significant growth opportunities that lie ahead for Alibaba, considering its current market valuation, which appears undervalued according to InvestingPro Fair Value analysis.
The endorsement of Alibaba’s stock comes at a time when the company is focusing on leveraging AI to enhance its services and expand its market reach. With an overall Financial Health Score of "GOOD" from InvestingPro, and strong analyst consensus, this technology-driven approach is expected to play a pivotal role in Alibaba’s growth strategy. Get access to the comprehensive Pro Research Report for deeper insights into BABA’s potential.
In summary, Susquehanna’s outlook for Alibaba remains unchanged, with a long-term Positive view on the stock. The firm’s analysts believe that Alibaba’s current valuation does not fully reflect its market potential and growth prospects, particularly in the context of its ongoing investment in AI and the Chinese e-commerce sector.
In other recent news, Alibaba Group Holding Limited reported its fourth fiscal quarter of 2025 earnings, revealing a revenue shortfall attributed to weaker performance in its AIDC division and outdated consensus estimates. Despite this, the company’s core commerce and cloud computing segments showed strong growth, with customer management revenue increasing by 12% year-over-year and cloud revenue accelerating due to AI service demand. Benchmark analyst Fawne Jiang adjusted Alibaba’s stock price target to $176 from $190 but maintained a Buy rating, citing strong fundamentals in core segments. Morgan Stanley (NYSE:MS) also maintained an Overweight rating with a $180 price target, expressing confidence in Alibaba’s cloud revenue growth and potential upswing in Alicloud’s performance. The firm expects Alibaba to benefit from increased AI inference demand, projecting an acceleration in cloud revenue growth through fiscal year 2026. Barclays (LON:BARC) echoed this sentiment, maintaining an Overweight rating and $180 price target, highlighting Alibaba’s strategic position in the AI sector and its role as a major AI infrastructure provider in China. Additionally, Alibaba’s food delivery service, ele.me, plans to invest in a partnership with TTG to enhance user engagement and compete with JD.com. Meanwhile, ZTO Express (NYSE:ZTO) announced the appointment of Di Xu, an investment director at Alibaba, to its board of directors, signaling strategic shifts within the logistics industry.
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