11 Most Undervalued Long Term Stocks to Buy According to Hedge Funds

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3. Alibaba Group Holding Limited (NYSE:BABA)

Forward P/E: ~13.6x

5-year Revenue Growth: ~14.3%

Number of Hedge Fund Holders: 125

Alibaba Group Holding Limited (NYSE:BABA) is one of the Most Undervalued Long Term Stocks to Buy According to Hedge Funds. On July 24, Mizuho’s analyst, Wei Fang, reduced the price objective on the company’s stock from $160 to $149, hinting at the growing concerns related to the profit margins. As per the analyst, increased competition in China’s local commerce sector, mainly in food delivery and instant retail, is starting to impact Alibaba Group Holding Limited (NYSE:BABA)’s bottom line.

However, the analyst was confident in Alibaba Group Holding Limited (NYSE:BABA)’s long-term outlook and maintained an “Outperform” rating. The consumer demand remained robust during the June quarter, thanks to the promotional events and smartphone trade-in offers. For FY 2025, Alibaba Group Holding Limited (NYSE:BABA)’s user-first AI-driven strategy delivered healthy results amidst accelerated growth throughout its core businesses. Alibaba Group Holding Limited (NYSE:BABA) established a well-defined growth portfolio focused on AI + Cloud, e-commerce, and other internet platform businesses.

The company continues to seize the historic opportunity offered by AI and has been ramping up its investments in AI infrastructure and advanced technologies to further strengthen Alibaba Group Holding Limited (NYSE:BABA)’s global leadership in technology. Patient Capital Management, a value investing firm, released its Q2 2025 investor letter. Here is what the fund said:

“Alibaba Group Holding Limited (NYSE:BABA) sold off early in the quarter following President Trump’s “Liberation Day” tariff announcement, which imposed ~50% tariffs on Chinese goods. As the US and China moved toward tentative agreements, the stock began to recover. Fundamentally, we continue to see an attractive setup. Alibaba is benefiting from accelerating AI initiatives, renewed momentum in its Tmall platform, and rapid growth in instant shopping and local services. These trends support a broader turnaround in core commerce and digital services. Despite these tailwinds, the company trades at just 11.2x earnings, well below historical averages, and continues to return capital to shareholders through a 1% dividend yield and a robust buyback program. We believe Alibaba remains significantly undervalued relative to its sum-of-the-parts, and see meaningful upside as fundamentals stabilize and sentiment improves.”

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