Online retailer Alibaba (BABA) has made a name for itself over the years as the Chinese Amazon, and with good reason. It is a major retailer and it has its own cloud division, much like Amazon (AMZN). And now, it has expanded into artificial intelligence (AI), and is offering up a special end-of-year deal on some of its AI models. The news proved welcome to investors, and they sent shares up modestly in Tuesday morning’s trading.
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A CNBC report noted that Alibaba is cutting prices on some of its large language models (LLMs) by up to 85%. Specifically, the Qwen-VL model will be getting the biggest price cut. Qwen-VL is a model geared toward recognizing text and images alike, and this is largely seen as a means to better compete among a growing number of Chinese AI market entrants.
Alibaba has used price cutting before as a means to get out in front of competitors; going all the way back to February, Alibaba launched price cuts of up to 55%, the report notes, on several different cloud products to draw attention. Back in May, the Qwen AI model got a price cut of nearly 97% as Alibaba sought to drive interest in one of its key models.
Big Grocery Win
And Alibaba’s imitation of Amazon only continues from there with its Freshippo line, a supermarket chain that has done shockingly well of late. How shockingly? Freshippo has brought in profit for nine straight months, noted a South China Morning Post report.
It has also been staging a rapid expansion. On average, the report noted, Freshippo opens a new store every five days in China, with 72 opened so far in 2024. Freshippo made plenty of new hires, promoted over 10% of its procurement staff, reengineered its compensation, and renovated close to half its stores to improve customer experience. Add this all together and it is little wonder why Freshippo proved a winner in a field with plenty of competitors.
Is Alibaba Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 14 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 16.11% rally in its share price over the past year, the average BABA price target of $127.05 per share implies 49.86% upside potential.
