Nvidia is all the rage this summer, and for good reason. Its growth trajectory has been absolutely explosive. But it’s also extremely expensive (and perhaps overvalued), trading at about 70 times earnings. Meanwhile, a Chinese company you’ve probably never heard of is also going all in on AI and seeing massive returns. Since Alibaba (NYSE: BABA) isn’t yet a household name in the US, its valuation is still quite low. Investors who jump in now could see plenty of upside in the coming months and years.
Who Is Alibaba?
Alibaba Group is a massive tech company in China focusing on e-commerce, cloud computing, and more. It’s recently developed its own AI tools, including a proprietary large language model (LLM), to help its e-commerce sellers overcome language barriers to serve customers in other countries. In internal testing, these tools helped merchants grow orders by as much as 30%.
As of now, Alibaba’s international e-commerce segment is still small, accounting for only about 12% of its more than $30 billion in top-line revenue for the first quarter of 2024. But it’s also the company’s fastest growing segment, which means a lot of potential lies ahead. Meanwhile, Alibaba has its other lines of business to lean on, making its AI investments a relatively safe choice.
What The Analysts Are Saying
Alibaba’s stock has dropped by more than 60% in the past three years, but this reflects conditions outside of the company’s control. Chinese stocks as a whole are struggling due to concerns about tensions between the US and China, as well as fears about government control over private Chinese companies.
But many analysts think these concerns are largely unfounded, at least when it comes to Alibaba. It’s a large, stable company with a massive reputation in its home country and plenty of diversification to weather any downturns in specific sectors. It’s also cheap, trading at well below its average price-to-earnings (P/E) ratio of about 36. If you’re willing to take a chance on a Chinese company that looks primed for explosive growth, this is definitely one to consider.
Neither Lisa Fritscher nor Stocks.News have positions in this company.
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Lisa Fritscher
Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...