Goldman Sachs reaffirmed its positive outlook on Alibaba (BABA) after it launched its latest AI model, claiming it to surpass DeepSeek. Analyst Ronald Keung reiterated his Buy rating on BABA stock yesterday, predicting an upside of over 20%. Overall, the stock has a Strong Buy rating on TipRanks, with 12 Buy recommendations.
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Notably, DeepSeek is a Chinese startup that released a free, open-source large-language model in December. Developed in only two months with a budget of less than $6 million, it is regarded as a cost-effective competitor to some of the most advanced AI language models available.
Alibaba Claims New AI Model Outshines DeepSeek
Recently, Alibaba Cloud announced the launch of its new open-source multi-modal AI model, Qwen2.5-VL. It can understand images and text, generate images from text, interact with devices, and comprehend long videos. Along with this, Alibaba also launched the Qwen2.5-1M, a large language model (LLM) capable of processing up to 1 million input tokens at once.
Similarly, DeepSeek revealed a competing open-source model called Janus-Pro, which focuses on multi-modal and visual generation tasks.
Alibaba Cloud unit claimed that Qwen 2.5-Max outperforms OpenAI’s GPT-4, DeepSeek-V3, and Meta’s (META) Llama-3.1-405B in nearly every area.
Goldman Sachs Sticks with Buy Rating
Goldman believes that the growing adaptability of Chinese AI models and improvements in computing cost efficiencies could lead to more widespread use of AI applications and open up opportunities for further global expansion of Chinese companies.
Overall, Goldman is bullish on Alibaba’s Cloud segment considering the introduction of software service fees and upgrades in advertising technology in September 2024. These are expected to stabilize transaction rates and lead to a turnaround in the company’s earnings starting in the March 2025 quarter.
Additionally, Goldman noted that the current market value of the stock already reflects the challenges posed by tough competition in e-commerce.
Is BABA Stock a Good Buy?
Turning to Wall Street, BABA stock has a Strong Buy consensus rating based on 11 Buys and one Hold assigned in the last three months. At $121.33, the average Alibaba price target implies a 26.3% upside potential.
