Alibaba: Winning The AI Arms Race In China
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 20 2024
0mins
Source: SeekingAlpha
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Analyst Views on BABA
Wall Street analysts forecast BABA stock price to rise
15 Analyst Rating
15 Buy
0 Hold
0 Sell
Strong Buy
Current: 130.820
Low
180.00
Averages
203.09
High
230.00
Current: 130.820
Low
180.00
Averages
203.09
High
230.00
About BABA
Alibaba Group Holding Ltd is an investment holding company mainly engaged in the provision of technology infrastructure and marketing platforms. The Company operates its business through four segments. The Alibaba China E-commerce Group segment is mainly engaged in E-commerce business, including operating Tmall Supermarket and Tmall Global, providing customer management services, product sales, as well as logistics services. It also operates quick commerce business such as Taobao Instant Commerce and Ele.me, as well as the China commerce wholesale business through 1688.com. The Alibaba International Digital Commerce Group segment is mainly engaged in international commerce retail and wholesale business, operating platforms such as AliExpress, Trendyol, Lazada and Alibaba.com. The Cloud Intelligence Group segment mainly provides public and non-public cloud services. The Other segments primarily include the operations of Freshippo, Cainiao, Alibaba Health and other business.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Major Brands Onboard: Well-known brands like KFC, Luckin Coffee, and Mixue are among the first to participate in Qwen's rollout, enabling users to complete transactions directly within the Qwen app, reducing the hassle of switching between apps and enhancing shopping convenience.
- Beyond Traditional Chatbots: Qwen goes beyond providing AI-generated answers by remembering user preferences and offering personalized suggestions, such as recommending travel itineraries based on history, deepening user interaction with brands.
- Building a Connected Commerce Ecosystem: Alibaba aims to integrate Qwen more deeply into its digital network, including Taobao and Tmall, by consolidating shopping, payments, and customer interactions into a single AI system, helping merchants and partners increase revenue.
See More
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- U.S. Congressional Response: The U.S. House passed a war powers measure to end military involvement in Iran, reflecting growing congressional pushback against the scope and duration of the conflict, although the measure still needs Senate approval and could face a presidential veto.
- Corporate Earnings Impact: Broadcom's shares plummeted nearly 14% in after-hours trading due to weaker-than-expected software revenue and failure to raise its full-year AI chip sales target, negatively impacting Wall Street's recent tech-led rally.
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- Volatility Expectations: These companies have experienced an average stock price decline of 54% in the first 12 months, suggesting that SpaceX, as a soon-to-be megacap, may encounter similar severe volatility, particularly with high retail investor participation.
- Funding Scale and Valuation: SpaceX is expected to raise $75 billion at a $1.75 trillion valuation, positioning it among the top ten largest public companies, surpassing well-known firms like Meta and Tesla, which underscores its market potential and attractiveness.
- Retail Investor Participation: SpaceX plans to allocate up to 30% of its shares to individual investors, a stark contrast to the historical 90/10 institutional-to-retail split, which could further amplify market volatility and increase risks for investors.
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- IPO Pricing Strategy: SpaceX plans to issue 555.6 million shares at a fixed price of $135 each in its IPO, aiming for a fundraising size of $75 billion, a strategy that diverges from the typical price range approach, indicating strong confidence in market demand.
- Company Valuation: At the $135 price point, SpaceX would be valued at $1.75 trillion, making it the seventh-largest company in the U.S. and surpassing Tesla's $1.6 trillion market cap, further solidifying its leadership position in the aerospace industry.
- Market Impact: This IPO is expected to be the largest in history, exceeding Alibaba's IPO size, marking a significant breakthrough for SpaceX in the capital markets while also drawing attention to AI companies like Anthropic and OpenAI.
- Employee Stock Program: SpaceX plans to reserve up to 5% of its IPO shares for
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- Nvidia's Influence: CEO Jensen Huang's announcement of new PC processors developed with Microsoft at the conference led to a 32% surge in Marvell's stock, highlighting Huang's market influence and the potential for guiding future tech investments.
- Geopolitical Risks: Despite ongoing optimism in the AI space, geopolitical tensions, particularly the unresolved conflict between the U.S. and Iran, pose a risk to market sentiment, necessitating vigilance among investors.
- Oil Price Fluctuations: West Texas Intermediate futures rose over 1% to $94.81 per barrel due to potential disruptions in the Strait of Hormuz, indicating market sensitivity to geopolitical risks that could impact future energy investment strategies.
See More
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- Investment Strategy Shift: Goldman Sachs downgraded its rating on H shares to market-weight while maintaining an overweight stance on mainland A shares, reflecting its preference for investments in artificial intelligence hardware, which is expected to enhance its competitive edge in the AI sector.
- Target Index Increase: The firm raised its 12-month target for the CSI 300 from 5,300 to 5,500, indicating nearly a 12% upside from Tuesday's close, showcasing optimism towards the mainland market.
- Market Performance Discrepancy: So far this year, the Hang Seng Index has risen about 1.5%, while the CSI 300 has gained over 6%, highlighting the relative strength of the mainland market, particularly in the AI hardware sector.
- IPO Dynamics Shift: Anticipated Chinese chip and humanoid robot IPOs are set to launch directly in the mainland market, with H-share AI model companies also planning A-share listings, indicating an increasing attractiveness of the mainland market for tech innovation.
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