While the recent Biden Administration rules around chip exports have starkly limited China’s options in terms of advancing artificial intelligence (AI) development, it’s clear that they haven’t necessarily stopped them. In fact, e-retailer and Chinese stock great Alibaba (NYSE:BABA) may have advanced the cause of internal Chinese AI development with a new chip. The news sent Alibaba shares up nicely, almost 3% in Friday morning’s trading.
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The new chip, based on reports from the South China Morning Post, is known as the Zhenyue 510, a controller integrated circuit using RISC-V architecture. That makes it suitable in use for developing custom processors, and custom processors are a major factor in AI development. The Zhenyue 510 is also a step ahead of many current processors, reports note, as it also boasts a 30% lower latency than other integrated circuits on the market. Alibaba will be putting the Zhenyue 510 to work in cloud data centers, handling applications from big data analysis to training AI systems.
But Alibaba is also a large-scale e-retailer, one that’s come under a bit of pressure lately amid a growing economic cloud in China, as well as in the world beyond. But there’s a point that might help Alibaba there: the upcoming Singles Day event. Singles Day, which occurs every November 11—four ones—is a recent holiday enacted in China to celebrate the single life. It’s a day where people buy presents for themselves, and is considered a shopping event on par with Black Friday in the U.S. And Alibaba is already out in full force, reportedly putting a lot of pressure on internal merchants to offer the best prices possible to help spur shopping. That pressure includes a potential loss of access to marketing support for Singles Day promotions.
Is Alibaba a Risky Stock?
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 $140.42 per share implies 63.68% upside potential.
