Alibaba Group Holding Limited (NYSE: BABA) has been performing exceptionally well lately, and it comes as no shock. After the Chinese government announced a major stimulus package, Alibaba’s stock shot up 29.04% in only one month, and the company has gained an impressive 30.06% over the past year. By Oct. 10, 2024, the company’s stock was trading at $109.28, with a whopping market cap of $261.723 billion.
So, what’s fueling this significant increase? Well, the Chinese government’s stimulus package is designed to get the economy moving, and as one of China’s biggest e-commerce players, Alibaba was bound to benefit. Investors are feeling optimistic about how Alibaba can benefit from this economic push.
However, the stimulus package isn’t the only thing Alibaba has going for it. The Oakmark International Fund, which holds Alibaba stock, highlighted in its Q3 2024 investor letter that there is still a lot of untapped potential in the organization. Oakmark thinks the market isn’t fully appreciating Alibaba’s ability to turn around its e-commerce business and explore other big opportunities. Despite the stock’s recent gains, the fund believes there is still room for even more growth.
Alibaba isn’t just a small part of Oakmark’s success. The Oakmark International Fund had a fantastic third quarter in 2024, returning 8.79% compared to the MSCI World ex USA Index’s 7.76%. Alibaba was the fund’s top performer, with healthcare and industrials also playing a big part in their overall gains.
It’s interesting to note that while Alibaba remains a top pick for investors, the number of hedge funds holding Alibaba shares saw a slight reduction, decreasing from 103 to 91 by the end of the second quarter of 2024. However, that hasn’t put a brake on the company’s momentum. Alibaba’s revenue for the first quarter of fiscal 2025 came in at RMB243.2 billion ($343.2 billion), up 4% year-over-year, though its consolidated adjusted EBITDA did drop by 1%.
Even with all this positive news, more investors are starting to favor artificial intelligence (AI) stocks, which could deliver bigger and faster returns than Alibaba. Oakmark, for example, has mentioned that while it is still bullish on Alibaba, the firm sees even more potential in AI stocks.
In short, Alibaba is looking strong, especially with the tailwind from China’s stimulus measures. However, with so much competition from the booming AI sector, it could be interesting to see how the company continues to perform in the months ahead.
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