Overview
Alibaba shares have recently stabilized after a period of volatility, presenting a potential buying opportunity for growth investors. The stock has found support at its previous high from March, which may signal a return to bullish momentum.
Recent Developments
U.S.-listed shares of Alibaba (BABA) have gained attention on social media platforms like Stocktwits, particularly due to speculation surrounding Meta's use of Alibaba's Qwen AI model. Additionally, there are reports that Alibaba is considering a significant purchase of AI accelerators to enhance its cloud infrastructure.
Performance and Growth
Alibaba has experienced a remarkable year, with its stock price increasing by 80% year-to-date. This surge is attributed to the rapid expansion of its AI offerings and robust growth in its cloud services. Analysts believe that China's AI technology was undervalued at the beginning of the year, especially with the introduction of the DeepSeek model.
AI Adoption and Market Impact
The Qwen AI tool from Alibaba has gained traction, with reports indicating that its adoption is accelerating. This has raised concerns among Western AI companies that have traditionally dominated the market. Notably, tech magazine Wired highlighted that U.S. companies are increasingly utilizing the Qwen model to cut costs, with significant expansion expected by 2026.
In July, downloads of Chinese AI models on platforms like HuggingFace surpassed those of U.S. models, with companies such as Airbnb, Perplexity, and Nvidia integrating Qwen into their operations. Furthermore, Bloomberg reported that Meta is also leveraging the Qwen model alongside Google's Gemma tool.
Future Prospects
Alibaba is reportedly in discussions to acquire between 40,000 to 50,000 AMD MI308 AI chips, which are compatible with Chinese technology. This acquisition could significantly enhance Alibaba's cloud offerings and contribute to revenue growth by 2026. Analysts suggest that if U.S. tech stocks continue to rise, BABA shares may also see upward momentum, making the current price level an attractive point for potential buyers.