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Optimism around artificial intelligence could mean big gains in Alibaba shares, according to Bernstein. The firm upgraded the stock to outperform from market perform and hiked its price target by $61 to $165. That new target implies 23.1% upside potential as of Tuesday’s close. Shares of the Chinese e-commerce giant have soared more than 50% over the past month since Chinese startup Deepseek low-cost, open-source model rattled U.S. tech stocks in January by raising fears around competition and spending in the artificial intelligence space. On Wednesday, shares rose more than 4% in the premarket after the company announced that it’s made its video generation AI models free to use – or open source, like DeepSeek’s. BABA 1D mountain BABA, 1-day Analyst Robin Zhu only sees positive sentiment around the technology continuing to translate to growth for Alibaba. That view also comes on the heels of the company’s strong fourth-quarter results last week, which sent shares soaring. “While last week felt like a local maximum for AI sentiment, the combination of more gainful capital allocation (AI infrastructure over chasing Temu in global markets), a better industry structure for AI than legacy cloud, and possible spill-over effects of an AI capex boom in China makes us feel Alibaba’s earnings could now be on a more upwardly-pointing trajectory,” the analyst wrote in a Wednesday note. “Risk-reward skews positive in our view, as the details around Alibaba’s AI growth are fleshed out in the next couple quarters, and as the market moves towards FY3/27E-based valuations,” Zhu also said. The analyst added that he expects the first two quarters of 2025 to show “meaningful” acceleration in revenue for Alicloud – the company’s cloud computing unit. He also said he anticipates investors will buy the dips as more details around AI growth are made known. Zhu’s rating joins most analysts on Wall Street with a bullish view on Alibaba. In all, 39 out of 44 analysts have a strong buy or buy rating, while the remaining five have taken a neutral stance, per LSEG. The stock also has a consensus target of $150, which implies 12.1% upside from Tuesday’s close.
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