Alibaba and AI: Why Alibaba is Among the Top Cheap Stocks for 2025
Alibaba and AI – The artificial intelligence (AI) sector dominated discussions in 2024, with its rapid growth and innovation causing waves across financial markets. As we move into 2025, the AI industry continues to expand, offering both opportunities and risks for investors. In this context, Alibaba Group Holding Limited (NYSE: BABA) has emerged as a key player. However, as AI stocks gain traction, it’s crucial to examine where Alibaba stands in comparison to other cheap AI stocks that analysts believe are undervalued and have significant upside potential.
AI’s Momentum in 2024 and Beyond
Throughout 2024, AI was one of the most talked-about topics on Wall Street. The technology has proven to be transformative across multiple industries, particularly in sectors like finance, healthcare, and tech. The AI market continues to grow, with massive investments pouring in from both the private and public sectors. Notably, President Donald Trump recently unveiled a $500 billion AI initiative, a joint venture called Stargate, involving OpenAI, Softbank, and Oracle.
However, DeepSeek, a new AI model introduced by a Chinese tech company, has made headlines by providing a better alternative to GPT-4. The company claims to have designed its model in just two months at a cost of under $6 million using Nvidia’s H800 chips. This breakthrough has rocked the U.S. market, causing a sharp drop in NVIDIA Corporation’s (NASDAQ: NVDA) stock, which lost over 16% of its value, amounting to a $600 billion market cap loss. This was the largest one-day loss in U.S. history, highlighting how quickly the AI landscape is changing.
Alibaba’s Position in the AI Market
As we consider the list of cheap AI stocks to buy in 2025, Alibaba stands out for its ambitious expansion into AI. The company has made significant investments in AI-driven solutions, particularly in the fields of cloud computing, machine learning, and natural language processing. Alibaba Cloud, the company’s cloud computing arm, has been a strong driver of growth, providing AI-powered infrastructure to businesses across China and beyond.
Alibaba’s AI advancements are gaining traction as the company continues to diversify its portfolio. The company is also integrating AI into its e-commerce platform to improve customer experiences through personalized recommendations, targeted ads, and chatbots powered by natural language processing.
Despite these advancements, Alibaba’s stock price has faced volatility due to broader market conditions and regulatory scrutiny. Investors are now looking at Alibaba as a potential long-term play, considering the company’s market position and its increasing reliance on AI to fuel growth. This makes Alibaba a prominent contender on the list of cheap AI stocks, especially for those looking for AI stocks with significant upside potential.
The Rise of DeepSeek and Market Reactions
DeepSeek’s impressive performance has left many in the AI space questioning whether American companies like Nvidia and Google are at risk of being overtaken by Chinese companies leveraging more cost-effective methods. DeepSeek’s breakthrough highlights the efficiency with which Chinese developers can design AI models, processing only 5% of the data, which results in a 95% reduction in costs.
In response, Patrick Moorhead, founder and CEO of Moor Insights & Strategy, called the U.S. market’s reaction to DeepSeek’s success an “overreaction.” He noted that DeepSeek’s advancements are precisely what the AI industry needs in terms of efficiency, and that investors should focus on AI’s progress in inference, not just the competition between companies.
How Cheap AI Stocks Are Determined
In the current environment, it’s more important than ever for investors to evaluate cheap AI stocks carefully. To determine which AI stocks are undervalued, we reviewed various stock analyses and news articles. The stocks included on this list are those that Wall Street analysts believe have a minimum upside of 30% as of January 2025.
For our research, cheap AI stocks are defined as those that are currently undervalued but are expected to surge in the coming months as AI technologies continue to evolve. Alibaba, with its strong presence in AI and its significant market capitalization, stands as one of the more affordable AI stocks to watch.
Hedge Fund Influence and Popularity
One of the key factors in determining which AI stocks to buy is the influence of hedge funds. Our research has shown that following the top picks of the best-performing hedge funds can provide significant returns. Hedge funds play a vital role in influencing the direction of the market, and their interest in AI stocks is growing.
As of Q3 2024, Alibaba remains a popular choice among hedge funds due to its AI investments and strategic positioning. The company is gaining attention from major investors who see long-term value in its growing AI initiatives.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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