Michael Burry, the “Big Short”, investor increased his stakes in Alibaba Group Holdings Ltd. (NYSE: BABA), by 30% during the third quarter.
In the coming months, he expects tech stocks to rise on the strength of China’s massive stimulus program.
Burry’s Scion Asset Management owns about 200,000 Alibaba shares.
Since the beginning of 2024, this investment company has aggressively bought BABA shares.
Alibaba’s shares have fallen by over 20 percent since their peak in early October.
Alibaba Shares: Are they worth purchasing?
Alibaba’s stock is attractively priced at the moment, as the new CEO Eddie Wu has a commitment to revitalizing its core ecommerce business. He also wants to win back market share that it lost in the past to rivals such as Pinduoduo.
The latest results show that his efforts have already begun to bear fruit.
BABA’s third quarter financial results were boosted by a double-digit increase in the number of orders, which helped to drive an impressive year-on-year rise in Gross Merchandise Value (GMV).
The multinational confirmed on Friday that its international ecommerce segment is still strong, despite the ongoing difficulties in China. The revenue from this business grew by 29% during Q3.
Alibaba’s stock yields a dividend of 2.21 percent at the time this article was written, which is another reason why you should own it.
BABA stock is a AI stock
Alibaba’s shares are also worth buying because of their exposure to the Artificial Intelligence market, which Statista predicts will continue growing at an annualized compound rate of 28,46% until the year 2030.
BABA’s public cloud product revenues grew by double digits, while revenue from AI-related products grew triple digits in the third quarter of its fiscal year.
In a Friday statement, Eddie Wu, chief executive of the company, told investors that he was more confident than ever in his core business and would continue to support long-term expansion.
Alibaba announced a new AI-enabled small business search tool earlier this week. Alibaba is reportedly also considering raising $5 billion via a bond issue.
Alibaba Stock could rise to $137
James Lee, an analyst at Mizuho, seems to agree with Burry on Alibaba’s shares.
This week, he reiterated that he rated the stock as “outperform”. He also raised its price target from $100 to $113. That’s a 20% increase.
Lee cited the stimulus plan for his positive view of BABA and stated that its substantial shareholder returns would continue to be a tailwind going forward.
Barclays expects Alibaba to reach $137 in the next 12 months. Our market expert Crispus Ngaa even predicts that BABA stock could surge up to 90 percent.
Investors should still note, however, that Alibaba Group Holdings Inc. increased its revenue in the third fiscal quarter by 5,0%. This amounted to RMB 236.5 Billion ($32.71 Billion). The analysts, on the other hand, were expecting a much higher RMB 238,9 billion.
Should you also buy Alibaba? This post may be updated as new information unfolds
