Setting aside the impact of geopolitical flashpoints, bank failures, and oil cartels, one of the biggest market movers recently stemmed from artificial intelligence (AI). While investors bid up the usual suspects, Chinese e-commerce giant JD.com (NASDAQ:JD) may actually represent a hidden AI gem. Therefore, I am bullish on JD stock.
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Fundamentally, the e-commerce stalwart has always benefited from its home nation’s burgeoning consumer market. According to a 2021 report from McKinsey & Company, as measured in purchasing power parity (PPP), analysts estimate that China stands as the largest consumer economy. Add AI protocols to the mix, and JD stock could potentially enjoy a boost.
JD Stock Goes Chatbot
As TipRanks reporter Sheryl Sheth mentioned, OpenAI’s chatbot platform ChatGPT generated tremendous buzz. Primarily, the innovation captured the public’s attention because of its intuitiveness. Basically, a user doesn’t need to speak tech geek to make the protocol work. Rather, inputting questions in normal human language yields (hopefully) practical, insightful answers.
With the cat out of the bag, the race is on for multiple companies to promote their own take on AI-generated question-and-answer interfaces. Several folks talk about the typical names, such as Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Baidu (NASDAQ:BIDU), Alibaba (NYSE:BABA), and Meta Platforms (NASDAQ:META). However, JD stock deserves closer inspection.
In February of this year, CNBC reported that JD.com will release an “industrial version” of ChatGPT called ChatJD. According to the business news outlet, the platform will be a chatbot product focused on the fields of retail and finance. As well, JD.com’s management team stated that the protocol will be able to generate content as well as have human-to-computer dialogue.
To be sure, the AI battle already represents an intensely competitive arena. Chances are, the magnitude of intensity will only accelerate from here. However, JD stock enjoys a critical advantage — corporate synergies.
JD.com Offers Targeted Intelligence
As with any tech platform, AI-driven chatbots are only as effective as their underlying data canvas allows them to be. In other words, chatbots can’t answer questions beyond the scope of either their information base or deductive capabilities. However, with JD.com focusing specifically on certain knowledge segments (i.e., retail and finance), it can potentially skip the line for chatbots focused on an everything, everywhere approach.
To clarify, a financial institution’s customer service unit may deliver value via AI protocols for customers seeking simple requests: checking balances, getting a status update on a claim, and so forth. However, AI may not be appropriate for resolving a complex identity theft issue. For that, the best human operators need to be put on the case.
JD.com appears to understand this dilemma and therefore focuses on specific markets. By bolstering its ChatJD application for online retail and financial analysis, the company can build expertise in high-demand areas without wasting time on being everything for everyone.
In addition, JD stock benefits from natural synergies. According to the aforementioned CNBC report, ChatJD can add value to the retail experience through the generation of product summaries. Therefore, the Chinese juggernaut may easily leverage its already-relevant e-commerce business to boost its AI credibility. In turn, that same effort should yield greater sales.
Enticing Financials
While JD stock might be somewhat overlooked against the crowd of A-list competitors, astute investors should go against the grain. With the financials also supporting the underlying enterprise, JD could be a steal.
Sure, JD stock slipped more than 29% on a year-to-date basis. While not encouraging, the market appears to be ignoring the underlying fiscal strengths. For instance, JD.com features a cash-to-debt ratio of 3.38 times. This stat ranks higher than 80.80% of companies listed in the cyclical retail industry.
Operationally, the e-commerce giant commands a three-year revenue growth rate (on a per-share basis) of 19.4%. In contrast, the sector median value is only 2.7%, translating to JD.com beating 82.38% of its rivals. Also, the enterprise’s book-value-per-share growth rate during the same period stands at an impressive 34.3%.
To be fair, the market prices JD stock at a forward multiple of 14.76. The sector median value is 14.89 times, meaning that JD is neither overvalued nor undervalued. However, shares trade at 0.4 times trailing sales, ranking better than 64.56% of peers.
Is JD Stock a Buy, According to Analysts?
Turning to Wall Street, JD stock has a Strong Buy consensus rating based on 11 Buys, three Holds, and zero Sell ratings. The average JD stock price target is $67.92, implying 69.8% upside potential.
The Takeaway: It’s Time to Give JD Stock Another Look
While JD.com may not be the first name that pops into mind when discussing AI protocols, it shouldn’t be the last. Delivering a targeted chatbot protocol, the e-commerce specialist can leverage its core business for enhanced success. Further, the underlying positive financials are a major selling point for JD stock.
