We recently published a list of Analysts Are Talking About These 10 AI Stocks. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other stocks that analysts are talking about.
Gene Munster from Deepwater Asset Management said in a latest program on CNBC that the AI hardware trade is still intact and the analyst believes DeepSeek is a net positive for the industry.
“The consensus DeepSeek has been a positive for AI. I think when it comes to the cost of AI inference, it’s going to go through the floor. Sam Altman said after DeepSeek that they expect the cost of tokens to go down 10 to 12x per year for their second-tier model. I mean, that’s basically through the floor. And I think the third piece to this, if those two happen, we get this hardware build-out, we the cost of compute or the cost of inference declining. I think you’re going to see some just profound impacts. And so I’m still bullish on this market. I think that what we’re seeing right now is a funk, and I think that we still got two great years left of this AI trade.”
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For this article, we picked 10 AI stocks currently making moves on the back of the latest news. With each stock, we have mentioned its hedge fund sentiment. Why are we interested in 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).
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Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Investors: 107
Don Kaufman from TheoTrade said in a latest program on Schwab Network that there’s a lack of clarity on Alibaba Group Holding Limited (NYSE:BABA)’s future and the company’s AI offerings.
“Alibaba has gone on an absolutely parabolic run from 80 to 129. Maybe in the last two days, we’re seeing a little bit of a pullback, but really, it’s all about earnings—just kind of stalling out before the earnings. I mean, I think this one is going to be plain and simple: buy the rumor, sell the news. There is no clarity whatsoever on the future of Alibaba. We don’t know what tariffs are going to look like, we don’t know if their AI is actually going to be effective with Apple. There’s too many unknowns for this underlying. I like the bearish tilt.”
Conventum – Alluvium Global Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:
“On 24 September the People’s Bank of China unveiled a massive three part stimulus package involving: (1) slashing the amount of cash banks need to hold in reserve and lowering the main policy interest rate; (2) cutting mortgage rates on existing home loans by 0.5% and reducing down payment requirements for second homes from 25% to 15%; and (3) supporting equity markets by a USD 114b lending pool to encourage companies to buy back shares and non-bank financial institutions to buy local equities (which may be expanded by the same amount two more times)5 . We are flabbergasted. But we shouldn’t be. After all, these types of arrangements have been all too common over the last 15 years. The local equity markets responded with gusto, and for the last week of the quarter the CSI 300 Index (Shanghai and Shenzen listed companies) was up 25.1%. Alibaba Group Holding Limited (NYSE:BABA) was not lost in all this, and returned 26.8% over that one week period. But Alibaba had already performed well so during the whole September quarter it was up a staggering 56.0%. As a result, Alibaba is no longer the cheap stock it once was. It now trades at a premium to our valuation – a valuation which admittedly had been progressively reduced over our holding period as a result of deteriorating business fundamentals. As a result of Alibaba’s significant outperformance, by the end of the quarter it had reached 3.7% of the Fund. We are weighing up our options here, considering the relative risk.”
Overall, BABA ranks 7th on our list of stocks that analysts are talking about. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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 the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.