We recently published a list of Billionaire Lei Zhang’s 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other billionaire Lei Zhang’s stock picks with huge upside potential.
Lei Zhang and Hillhouse Capital: Quiet Power in Asian Investing
Lei Zhang, the founder and CEO of Hillhouse Capital, is one of the most influential yet low-profile figures in the world of investing. Born and raised in China, Zhang later studied in the US, earning an MBA from Yale, where he was influenced by David Swensen, the university’s legendary endowment manager. It was with Swensen’s support that Zhang launched Hillhouse in 2005, initially backed with capital from Yale’s endowment fund. Hillhouse Capital started small but quickly established itself as a powerhouse in Asia’s fast-evolving markets. The firm is known for its long-term, research-driven approach, often taking significant positions in high-growth companies and partnering with management teams to help scale operations. Rather than chasing short-term gains, Zhang’s strategy is focused on building durable, competitive businesses.
One of Hillhouse’s early and most notable investments was in Tencent, the Chinese tech giant. The firm got in when the company was still relatively unknown outside China, and the bet paid off tremendously. Other major holdings have included JD, Baidu, and Meituan, as well as a growing number of companies in sectors like healthcare, logistics, and consumer goods. Zhang’s investment style blends elements of private equity and public market investing. He’s not afraid to hold stakes for many years, and Hillhouse often works closely with portfolio companies to improve operations and governance. This hands-on, collaborative model has helped the firm build a strong reputation among entrepreneurs and institutional investors alike.
Hillhouse Capital has since expanded beyond China and now manages tens of billions of dollars across Asia and other markets, with offices in Singapore, Hong Kong, and New York. Despite its size, the firm remains relatively discreet. Zhang himself rarely gives interviews and avoids the spotlight, preferring to let the results speak for themselves. Hillhouse Investment has built a reputation for exceptional returns, achieving annualized gains as high as 52% from its founding through 2012. Its expansion has been fueled by a consistent ability to deliver strong results even as the firm has grown. Hillhouse has a broad sector focus that includes technology and enterprise software. The firm also frequently collaborates with other major investors, such as Sequoia Capital, through co-investment partnerships.
Under Zhang’s leadership, Hillhouse has become synonymous with disciplined growth investing in some of the world’s most dynamic economies. For many, Zhang represents a new breed of the global investor: one who bridges East and West, and who plays the long game in an increasingly complex financial landscape.
Our Methodology
For this list, we picked stocks from Hillhouse Capital’s 13F portfolio as of the end of the fourth quarter of 2024. We listed them in the ascending order of analysts’ average upside potential. These equities are also popular among other hedge funds.
Note: All data was recorded on May 7, 2025.
At Insider Monkey we are obsessed with 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)
Hillhouse Capital’s stake: $414,394,167
Upside Potential: 34.41%
Number of Hedge Fund Holders: 107
Bernstein recently upgraded Alibaba Group Holding Limited (NYSE:BABA) to Outperform from Market-Perform, citing optimism about AI-driven growth in Alicloud and improved capital allocation. The firm raised its price target to $165 from $104 for US shares. The firm highlighted that Alibaba’s shares have surged since China’s “DeepSeek moment,” as investors increasingly value Alibaba Cloud in a sum-of-the-parts analysis. While AI hype may have cooled, Bernstein believes Alibaba’s earnings outlook has improved due to its more disciplined investment strategy, focusing on AI infrastructure over global e-commerce expansion. According to Bernstein, Alibaba Cloud must grow revenues by 25–30% by FY2026 to offset high capex, but its higher margins make it a strong contender in China’s AI race. Domestic e-commerce improvements, including stronger ad tech and rising commissions, also bolster the bullish view.
Overall, BABA ranks 6th on our list of billionaire Lei Zhang’s stock picks with huge upside potential. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high 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 an 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.
