While e-commerce giant Alibaba (NYSE:BABA) is often regarded as the Chinese Amazon (NASDAQ:AMZN), it doesn’t seem to quite branch out the way Amazon has as of late. But that’s changing, as Alibaba is one of the biggest Chinese stocks to get behind artificial intelligence (AI) development in the country.
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Alibaba, along with Tencent (OTHEROTC:TCEHY), are both invested in Zhipu, a private company that’s working to be the Chinese equivalent of OpenAI. So far, it’s brought in just over 2.5 billion yuan, or around $341.7 million. Zhipu has also pulled in investment from smartphone maker Xiaomi, and both Sequoia and Hillhouse have stepped in as venture capital. So far, Zhipu has built an entire chatbot based on its current models, which gives it access to the generative AI stakes.
There are, of course, two major issues with such a development. One, it’s already inherently limited because of the various chip prohibitions aimed at China and several of its allies. Therefore, getting the necessary chips to power AI systems will prove that much harder. Two, it’s also likely to run into some issues of capital going forward. While it’s been able to pull from domestic sources, and do a solid job in so doing, its ability to pull capital abroad will likely be limited. Chinese stocks have been rapidly selling off due to a variety of macroeconomic and geopolitical issues.
Is BABA a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 18 Buys and one Hold assigned in the past three months, as indicated by the graphic below. Furthermore, the average BABA price target of $140.84 per share implies 75.92% upside potential.
