Alibaba’s stock has seen a significant rally this year, with its US-listed shares more than doubling as investors buy into China’s vision for self-reliance in the tech landscape. The surge has positioned Alibaba as a key player in China’s artificial intelligence sector. Despite this impressive growth, the stock remains significantly below its all-time high, particularly when compared to major American hyperscaler stocks that have peaked recently. Alibaba is a multinational technology company specialising in e-commerce, retail, Internet, and technology. They provide consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals.
While caution remains regarding the Chinese economy and intense market competition, short bets on Alibaba spiked last month. However, the relatively attractive share price and low investment levels among global funds suggest potential for a continued rally. According to Jian Shi Cortesi, a fund manager at GAM Investment Management, there is still “significant upside” in Alibaba, and they anticipate a shift in underweight positions as fund managers seek to capitalise on the stock’s momentum. The sentiment could also be fuelled by the fear of missing out following the strong share price rally.
Despite the recent rebound, Alibaba’s stock is still recovering from a years-long selloff triggered by regulatory crackdowns, internal upheaval, and slowing Chinese consumption. Domestic price wars in the food delivery sector briefly interrupted the recent positive trajectory, highlighting ongoing concerns.
Currently, Alibaba is trading at approximately 22 times its estimated forward earnings in Hong Kong, double its three-year average, aligning with the Hang Seng Tech Index. This valuation is below Alibaba’s peak multiple and current multiples for companies like Amazon and Microsoft. Richard Clode, who manages Janus Henderson’s $6 billion Global Technology Leaders fund in London, noted that Alibaba’s valuation is not considered egregious, making global investors more comfortable entering the market.
