Alibaba’s stock rose to the highest point in March, as Chinese stocks surged following its strong financial results published on Friday. BABA’s stock price also surged after news reports indicated that the company had created a chip capable of competing with NVIDIA. The stock reached a new high of $136.42 – up 71% since its low point this year.
Alibaba challenges NVIDIA
Alibaba’s stock rose after WSJ revealed that it had created a chip which could challenge NVIDIA. The chip is being manufactured by a Chinese local company, not TSMC.
As the US and China fight for dominance in technology, and chips are becoming the mainstay of global economics, the new milestone is a significant one.
US blocked Nvidia, AMD, and Intel from supplying advanced chips to China. The US claims that the chips could help China develop advanced military equipment.
China then went on the offensive, investing billions in developing advanced chips. Recently, after NVIDIA was given the go ahead by the administration, the Chinese government advised its companies not to buy the H20 chip.
BABA’s stock rose as investors hoped that the company would be the next major player in the AI industry and semiconductor industry.
Alibaba releases modest results
Alibaba’s stock also rose after it published modest financial results. The company’s second-quarter revenue increased by 2%, to $34.5billion.
The company’s revenue would have grown by 10% if Sun Art and Intime were not sold. Net income increased by 76%, to $4.8 billion. This was due in part to equity investments as well as gains made from the divested companies.
Cloud Intelligence Group (CIG), which is a competitor to Amazon AWS and Microsoft Azure, has grown by 26 percent YoY, to reach $4.6 billion, as the AI market continues to grow.
Alibaba’s International Digital Commerce revenues rose 19% YoY, despite Donald Trump’s tariffs. Chinese ecommerce made $12.5billion, an increase of 10% year-on-year.
Ele.me, owned by the company, has been under increasing pressure from JD’s and Meituan’s competition. JD’s entrance into the industry has triggered a price war, with consumer discounts surging and riders receiving incentives.
China stock gains, Banma Network IPO
Alibaba’s stock has increased due to the current surge of Chinese stocks, as demonstrated by the Shanghai Composite and equities such as Cambricon.
The stock market has recovered mainly because Chinese investors continued to invest in the market following the collapse of real estate.
Alibaba’s shares also rose after it decided to spin-off its Banma Network Technology. This technology focuses on smart vehicle operating system and cockpit solutions.
Alibaba Stock Price Forecast
BABA’s stock has recovered in recent months. The chart on the daily timeframe shows a move from $78.9 to $135. The price has crossed an important resistance at $132. This was the biggest swing of May 14.
BABA’s stock has surged above moving averages and top oscillators are pointing upwards. Bulls will therefore continue to push the BABA stock upwards as they aim for the $146 resistance level, which was its high point on 17th March. If the stock moves above this level, it could lead to further gains and possibly to $150.
The post Why the Alibaba Stock Price has Gone Parabolic may change as new information becomes available.
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