To Apple Inc. (NASDAQ:AAPL), or not to Apple, or in other words to invest in Alibaba Group Holding Ltd (NYSE:BABA) instead, is a big question for hedge funds and other investors as they position their portfolios to take advantage of the better growth story that is being sold on the stock market. The topic was debated on CNBC between Micheal Murphy and Jon Najarian, among others.
“The reason why I would pick Apple Inc. (NASDAQ:AAPL), is that Alibaba Group Holding Ltd (NYSE:BABA) already has 80% of the China market so I see more growth for Apple, I see a better cash position for Apple, and also Baba has only been a public company for a couple of months now. We know the Apple story, we know how they have been able to operate for so long, so to me it kind of tips the scale in a big way in Apple’s favour,” said Murphy.
The action on the stock market today is reflective of a similar trend. Apple Inc. (NASDAQ:AAPL) is up about 1.24% and is trading at $115.4 whereas Alibaba Group Holding Ltd (NYSE:BABA) is currently down about 2.5%, and trading at $111.4. However, investors know better than to let short term trends dictate their investment choices.
Joshua Brown, another CNBC contributor who was participating in the debate went with both companies. That goes on to say that the choice presented is not an easy one. However, as Murphy pointed out, a proven track record of operating for several years in the industry cannot be overlooked. Alibaba Group Holding Ltd (NYSE:BABA)’s chances of operating profitably outside China are still very uncertain, given that it will not enjoy the support from the government apparatus that it does in its home country.
Apple Inc. (NASDAQ:AAPL) has a team of innovators that has not only delivered on what people expect its products to be, but have also contributed to raising those expectations. Alibaba Group Holding Ltd (NYSE:BABA) on the other hand, does not have an R&D department that could match this. The company has recently been making acquisitions in silicon valley with the equity that it raised, but it remains to be seen whether they will work out for the e-commerce giant in the long run.
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