Morgan Stanley has underscored potential risks for Alibaba, pointing to weaker consumption and a slower pace of enterprise digitalization. Despite these concerns, Alibaba remains a focal point in the evolving AI landscape. Recent data reveals that the crowding score for U.S. AI-related entities has increased by 0.2 over the past two years, while China's AI-related names have seen a modest rise of 0.02 this year. Among large Chinese internet technology companies, Alibaba holds the highest crowding score, indicating strong investor interest.
The investment community has kept a keen eye on prominent players in the sector. JPMorgan maintains a neutral stance on Baidu but expresses an overweight position on both Tencent and Alibaba. UBS highlighted that the increment in China's AI-related crowding score is significantly lower than the U.S., suggesting room for growth. Baidu's AI Cloud revenue demonstrated resilience, rising 26% year-on-year to 7.1 billion yuan in the fourth quarter. Baidu’s U.S.-listed shares have appreciated about 8% this year, reflecting confidence in its AI capabilities.
Tencent's performance in the market has been notable, with its Hong Kong-traded shares climbing approximately 24% this year. In contrast, Alibaba has seen varied assessments from major investment firms, with at least four maintaining a buy rating. Morgan Stanley holds an equal-weight rating on Alibaba with a price target of $100, while JPMorgan offers a more optimistic target of $125.
Alibaba's capital expenditures accounted for 11% of its revenue in the most recent quarter, showcasing its commitment to strategic investments. Sales for Taobao and Tmall Group rose by 5% during this period, further strengthening Alibaba's market position. Investors observed significant movements in Hong Kong's Hang Seng index, which reached a three-year high on Friday. The index gains were led by China Unicom, Lenovo, and Alibaba's locally traded shares.
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