TLDR:
- Alibaba stock soared 7.1% following a 90-day US-China tariff reduction agreement
- The company highlighted AI as its key operational driver for the next 3-5 years during its Aliday event
- Michael Burry’s Scion Asset Management holds Alibaba in its portfolio despite earlier Chinese tech selloffs
- Barclays maintains an “Overweight” rating with a $180 price target on BABA
- Alibaba’s cloud segment and AI services show strong growth potential with over 90,000 spin-off models from its Qwen AI model
Alibaba shares jumped Monday along with other Chinese stocks after the United States and China agreed to slash tariffs on imports for the next 90 days. The stock rose 7.1% in premarket trading, outpacing gains in other Chinese tech companies.
The tariff deal will reduce the rate the US imposes on Chinese goods from 125% to 10%. China will likewise cut its retaliatory levy on US goods to 10% from 125%.
But there’s more behind Alibaba’s rise than just the trade agreement. The company held its Aliday event over the weekend, where Chairman Joseph Tsai emphasized artificial intelligence as the “key driver of company’s operation in the next three to five years.”
The timing is significant as Alibaba prepares to release earnings on May 15. Investors seem optimistic about the company’s AI strategy.
Citi analyst Alicia Yap noted that Alibaba plans to integrate AI across all its business lines. The company believes AI will not only improve search recommendations but also “create and define new user entrances in different services.”
Market Recovery
The positive news helped Hong Kong’s Hang Seng Index close 3% higher on Monday. The index has now recovered all losses suffered since President Trump announced tariffs on what some called “Liberation Day” on April 2.
Mainland Chinese markets also responded well. The CSI 300 gauge rose 1.2%, while the Shanghai Composite increased by 0.8%.
Other Chinese stocks showed strong performances too. JD.com climbed 5.9% and Baidu rose 4.7% ahead of the US market open.
Chinese electric vehicle makers posted even larger gains. XPeng jumped 8.7%, while NIO and Li Auto added 6.8% and 7.1% respectively.
Investment Potential
Alibaba has also caught the attention of famed investor Michael Burry of “The Big Short” fame. His firm, Scion Asset Management, held a position in Alibaba as of its Q4 2024 filings.
This is interesting because Burry sold some Chinese tech stocks in late 2024, just before DeepSeek’s AI breakthrough sparked a $1.3 trillion surge in Chinese tech stocks.
Burry’s investment strategy often focuses on stocks he believes are undervalued, even if they face short-term volatility.
According to recent analysis, Alibaba shows a potential upside of 32.90% as of May 9, 2025. The stock remains popular among hedge funds, with 107 hedge fund holders reported.
Wall Street appears bullish on Alibaba’s prospects. On April 14, Barclays reaffirmed its Overweight rating with a price target of $180.
Barclays highlighted the rapid expansion of Alibaba’s cloud business, which is expected to continue throughout the year. The firm predicts cloud margins will likely remain consistent as Alibaba focuses on improving consumer adoption of AI.
Alibaba’s cloud segment offers various AI services, including image and audio recognition, natural language processing, and machine learning platforms.
The company’s Qwen AI model has gained substantial traction in the market. Over 90,000 spin-off models have been developed based on this technology, and more than 290,000 users access its APIs through Alibaba Cloud.
The US-China tariff reduction, combined with Alibaba’s growing AI capabilities, appears to have created renewed optimism among investors regarding the company’s future growth prospects.
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