We recently published a list of 10 Best Stocks to Buy Now For the Long Term. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other best stocks to buy now for the long term.

What’s Next for the Equity Markets?

The US equity markets have started to show signs of recovery after weeks of volatility due to the tariff situation. On March 21, J.P Morgan Management’s Global Investment Strategist, Alan Wyne released his market update noting that this was the first weekly gain after four weeks for the US equity markets. While highlighting the current market condition Wyne highlighted that this improvement follows the Federal Reserve’s decision to leave interest rates unchanged while revising growth forecasts downward and increasing near-term inflation expectations. The Fed has emphasized that tariff-related inflation is likely transitory. Futures markets anticipate two interest rate cuts this year, with a 50% chance of a third, sparking demand in Treasury markets. On the other hand, yields on the 2-year and 10-year Treasury notes dropped by 7 and 9 basis points, respectively. Moreover, European stocks have continued to outperform, supported by Germany’s new legislation exempting defense spending exceeding 1% of GDP from borrowing restrictions. Wyne suggests that this policy could unlock significant fiscal spending across the Eurozone. The Stoxx 50 index is up 0.2% for the week and has gained 11% year-to-date.

While the S&P 500 is hovering near correction territory, marking five years since its COVID-19 drawdown. Wyne noted that the risks appear evenly distributed between bullish and bearish outlooks. On one hand, the bears argue that softer economic data and rising consumer inflation expectations could worsen with tariff escalations, potentially leading to stagflation. On the other hand, bulls counter that weak sentiment data does not necessarily reflect hard economic indicators such as employment and retail sales, which remain robust. Wyne highlighted that bulls point out that long-term inflation expectations are still anchored near the Fed’s target, mitigating risks of a wage spiral. He pointed out that historically speaking, investing during sentiment troughs has yielded strong returns in subsequent months.

Lastly, closing his market outlook with some investment advice, Wyne suggests that balancing risks by maintaining strategic asset allocation might be a viable strategy. He added that investors should use equities for long-term capital appreciation and fixed income for hedging during slowdowns. In addition, tactical adjustments can help capitalize on emerging opportunities while adding resilience through assets like gold and infrastructure investments. Wyne stressed that despite market volatility since the COVID-19 drawdown, the S&P 500 has risen over 150%, which underscores the importance of staying invested through uncertainties.

Our Methodology

To curate the list of the 10 best stocks to buy now for the long term we reviewed financial media reports and blue chip ETFs. From these sources, we picked stocks from multiple sectors including financials, energy, technology, consumer staples, and more. We finally selected stocks with a history of stable operations. Additionally, we checked their 10-year revenue growth rates and only considered companies with a growth rate of at least 7%. The list is ranked in ascending order of the number of hedge funds holding each stock, sourced from Insider Monkey’s Q4 2024 database.

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).

Alibaba Group Holding Limited (NYSE:BABA)

10-Year Sales Growth: 30.07%

Number of Hedge Fund Holders: 107

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese conglomerate primarily focused on e-commerce, cloud computing, logistics, digital media, and financial technology. On March 4, John Choi from Daiwa maintained a Buy rating on the stock with a price target of $170.

The analyst noted that he likes the company’s strategic focus on AI and cloud computing. Alibaba Group Holding Limited’s (NYSE:BABA) Qwen series of large language models and its open-source strategy are driving growth in the public cloud sector. These models are widely adopted, with over 90,000 derivative models developed globally, making Qwen a significant player in AI innovation. Moreover, the company’s collaboration with DeepSeek enhances its ability to deploy high-efficiency AI models. As a major client, Alibaba is well-positioned to benefit from China’s growing demand for AI computing infrastructure. Choi highlighted that the company is investing $53 billion over three years into AI infrastructure, including data centers and GPU-based technologies, signaling its commitment to becoming a global AI leader. Alibaba Group Holding Limited (NYSE:BABA) has grown its revenue by more than 30% over the past 10 years, thereby making it one of the best stocks to buy now for long term.

Conventum – Alluvium Global Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2024 investor letter:

“In early November the Chinese government announced further stimulus by way of a USD 1.4 trillion package to bail out local government’s debt. This appeared to underwhelm the equity market. So, Alibaba Group Holding Limited’s (NYSE:BABA) resurgence last quarter (when it was up 56.0%), could not be maintained, and the share price fell 25.1% in the December quarter. It is undoubtedly cheap on most metrics, and trades at a discount to our valuation. It currently accounts for 3.0% of the Fund.”

Overall, BABA ranks 7th on our list of best stocks to buy now for the long term. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that 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.

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.