China aims to increase its computing power by over a third over the next three years, according to Bloomberg. The plans could boost the fortunes of its homegrown tech companies, such as Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU).
The country aims to increase computing capacity from 197 exaflops at present to over 300 exaflops by 2025. This move is part of China’s efforts to bolster its sagging economy. It is also aiming to set up 20 smart computing centers while increasing the size of its optical networks and advanced storage systems.
The increased computing power is expected to support multiple industries, from manufacturing to healthcare, in the country. China’s efforts to fortify its technological capacity and supply chain come at a time when the U.S. is restricting exports of advanced technology to the country. These restrictions include advanced semiconductor solutions from NVIDIA (NASDAQ:NVDA), which are pivotal for major Chinese tech companies in training artificial intelligence models.
The trade restrictions from the U.S. have led to China looking to boost domestic tech production and lower its supply chain dependence on the U.S. Meanwhile, Alibaba shares have trended nearly 10% lower over the past month. The company is planning to list its logistics unit, Cainiao, but will continue to hold over a 50% stake in the company after the spinoff.
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Overall, the Street has a consensus price target of $142.28 on BABA, alongside a Strong Buy consensus rating. This implies a 65.3% potential upside in the stock.
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