By “Big Short” investor Michael Burry raised his stake in Alibaba Group Holdings Ltd (NYSE: BABA) by 30% in the third quarter.
He expects the tech stock to rally on the back of China’s stimulus blitz in the months ahead.
Burry’s Scion Asset Management now owns a total of about 200,000 shares of Alibaba.
The investment firm has been an aggressive buyer of BABA stock since the start of 2024.
Alibaba shares are down over 20% versus their high in early October.
Are Alibaba shares worth buying?
Alibaba stock looks attractive at current levels as its new chief executive Eddie Wu is committed to reviving the company’s core e-commerce business and winning back the share it has lost to smaller rivals like Pinduoduo in recent years.
And the latest results suggest his efforts are already bearing fruits.
BABA saw double-digit growth in orders that helped drive a robust year-on-year increase in gross merchandise value (GMV) in its third financial quarter.
On Friday, the multinational also confirmed that its international e-commerce segment remains strong despite ongoing challenges in China. Revenue from that business was up 29% in Q3.
Alibaba stock pays a dividend yield of 2.21% at writing which makes up for another great reason to own it.
BABA is an AI stock
Alibaba shares may be worth owning also because they offer significant exposure to the artificial intelligence market that Statista forecasts will grow at a compound annualized rate of 28.46% through the end of 2030.
BABA reported double-digit growth in its public cloud products while AI-related product revenue delivered triple-digit growth in its fiscal Q3.
“We’re more confident in our core businesses than ever and will continue to invest in supporting long-term growth,” chief executive Eddie Wu told investors in a statement on Friday.
Earlier this week, Alibaba unveiled an AI-enabled search tool for small businesses. It is also reportedly considering raising about $5 billion through a bond offering.
Alibaba stock could climb to $137
Mizuho analyst James Lee seems to share Burry’s optimism on Alibaba shares.
He reiterated his “outperform” rating on the tech and e-commerce stock this week and raised his price target to $113 which translates to a more than 20% upside from here.
Lee also cited stimulus plans for his constructive view on BABA stock and said its significant shareholder returns will continue to serve as a tailwind moving forward.
Barclays is even more bullish on Alibaba stock and expects it to hit $137 over the next twelve months – and our market expert Crispus Nyaga even sees a possibility for an up to 90% surge in BABA shares.
Nonetheless, investors should note that Alibaba Group Holdings Inc. improved its revenue by 5.0% to RMB 236.5 billion ($32.71 billion) in its fiscal third quarter. Analysts, in comparison, had called for a higher RMB 238.9 billion instead.
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