E-commerce giant Alibaba Group Holding appears to be on track to overcome a years-long downturn due to Beijing's sweeping stimulus measures, analysts said, as some foreign investors have vowed to bet on Chinese stocks.

“Alibaba could gradually become more attractive to some long-only funds since it is the largest e-commerce stock in China,” said Shawn Yang, senior analyst at Arete Research. “Expectations of macroeconomic improvement could be transferred to these consumer stocks. Alibaba is the largest among them and its situation is improving.”

Alibaba, owner of the South China Morning Post, is among a number of Chinese technology stocks that rallied this week after the People's Bank of China launched surprise market support measures that included mortgage rate cuts and an unprecedented $114 billion in stock value -Shopping opportunity.

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The company's shares closed up 10.07 percent to $105.07 in New York on Thursday, while shares in Hong Kong rose 4.86 percent to hit HK$102.50 on Friday. Shares of Nasdaq-listed e-commerce rival PDD Holdings, operator of discount shopping platforms Pinduoduo and Temu, rose 13.57 percent on Thursday, while JD.com rose 14.39 percent.

The global headquarters of Alibaba Group Holding is in Hangzhou, the capital of the eastern province of Zhejiang. Photo: Handout alt=The global headquarters of Alibaba Group Holding in Hangzhou, the capital of the eastern province of Zhejiang. Photo: Handout>

Although skepticism is high, some prominent Wall Street figures have expressed great confidence in Chinese stocks. Billionaire investor David Tepper, who founded Appaloosa Management in 1993, said in an interview with CNBC on Thursday that he was buying more of “everything” related to China, snapping up more shares of Alibaba, JD.com, Baidu and PDD .

Renewed positive market sentiment for Alibaba reflects the company's resilience after struggling in recent years stemming from Beijing's 32-month crackdown on Big Tech companies and the mainland's shaky post-pandemic economic recovery.

Those challenges caused the Hangzhou-based company's shares to lose nearly half their value in both New York and Hong Kong over the past five years.

Alibaba, China's largest operator of online shopping platforms and a major domestic player in artificial intelligence (AI), recently received praise from the state market regulator for compliance with corrective measures, ending more than three years of regulatory scrutiny over the Company burdened operations.

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State news agency Xinhua published an article this week praising Alibaba's latest milestone: No. 8 on US media outlet Fortune's 10th annual Change the World list for using AI to help doctors detect pancreatic cancer.

Alibaba Cloud's resources and capabilities were showcased at the Apsara Conference on September 19-21, 2024 in Hangzhou, capital of eastern Zhejiang Province. Photo: Xinhua alt=Alibaba Cloud's resources and capabilities were demonstrated at the Apsara conference in Hangzhou, capital of eastern Zhejiang province, from September 19 to 21, 2024. Photo: Xinhua>

A big advantage Alibaba has over other well-known Chinese technology stocks, according to Arete Research's Yang, is that its businesses have expanded significantly beyond the realm of online retail.

“Alibaba has many other things, such as cloud services and international expansion,” Yang said. “Cloud services now have a stable profit margin, although for a long time this area was not as valued compared to the core business of e-commerce.”

“If market sentiment is positive, people might take these valuations into account,” Yang said. “That could be an advantage for Alibaba compared to other stocks.”

Alibaba's cloud computing services unit announced last week at an event in Hangzhou the release of more than 100 large-scale language models – the deep learning technology that underlies generative AI applications such as ChatGPT – to the global open source community and a new text-to-video model as the company demonstrated its rapid progress in this area.

At the same event, Alibaba Cloud and semiconductor company Nvidia unveiled a joint AI initiative that will enable Chinese automakers to improve the autonomous driving experience for smart vehicle owners.

“Alibaba Cloud is investing with unprecedented intensity in the research and development of AI technology and building its global infrastructure,” Alibaba CEO Eddie Wu Yongming, who also serves as chairman and chief executive of Alibaba Cloud Intelligence, said at the event.

Jack Ma, founder of Alibaba Group Holding Photo: Shutterstock alt=Alibaba Group Holding founder Jack Ma. Photo: Shutterstock>

Chelsey Tam, senior equity analyst at Morningstar, sees Alibaba well-positioned to benefit from China's recent stimulus measures.

“If there were efficient measures to stimulate the economy and stabilize the real estate sector, China's GDP and consumer wealth would rise and consumption would increase,” Tam said. “An improving economy should drive discretionary spending and consumption increases, with Alibaba in comparison is expected to benefit more than some of its competitors.”

Earlier this month, Alibaba founder Jack Ma urged employees of the business empire he founded 25 years ago to “believe in the future” and “believe in the market” amid fierce competition, according to a statement released Sept. 10 internal letter shows.

Ma, who has stepped down from all corporate roles at Alibaba but remains a major shareholder, said this was expected because “no company can stay at the top in any field forever.” He added: “We need to be constantly reminded not to lose ourselves in the pressures of competition.”

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