We recently published a list of 12 Cheap AI Stocks to Buy in 2025. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other cheap AI stocks to buy in 2025.
Artificial Intelligence (AI) was a buzzword around Wall Street for most of 2024. AI has shown immense promise but comes with significant risks. Big AI players are dominating the broader market, but there will be opportunities for other companies to explore as the AI market continues to expand. For instance, the new administration is keen on technological advancement, and recently, President Donald Trump announced a $500 billion AI initiative, a joint venture known as Stargate between OpenAI, Softbank, and Oracle.
However, DeepSeek’s introduction shocked the U.S. companies after it released a new AI model, a much better alternative to GPT-4. DeepSeek claims to have designed the AI model in just two months and at around under $6 million using Nvidia’s less-advanced H800 chips, as reported by Reuters on January 27. Since the news broke out, NVIDIA Corporation (NASDAQ:NVDA) shares have plunged over 16%, wiping away $600 billion in market capitalization, the biggest one-day loss in U.S. history.
Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead, speaking to Market Domination, shared his views on DeepSeek. Moorhead was impressed by the efficiency of DeepSeek’s AI. He pointed out that the Chinese have used different techniques compared to American developers, where they were able to parse or train maybe 5% of the data, which is a 95% reduction.
However, Moorhead also addressed the U.S. market drop as an “overreaction.” “I think the market overall should be going crazy because [this is the] uplift of what we were looking for [from AI],” said Moorhead. He added that the investors’ focus should be on the progress in inference.
It might be a good time to invest in AI stocks, especially cheap AI stocks during the market’s overreaction.
To determine the list of cheap AI stocks, we went through various news articles and stock analyses. We shortlisted the AI stocks with the minimum analyst upside of 30%, as of January 27. Cheap, in the context of this article, means stocks that Wall Street analysts believe are undervalued and will surge to higher share prices. We have ranked the cheap AI stocks to buy based on their popularity among hedge funds, as of Q3 2024, in ascending order.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Alibaba Group Holding (BABA) has long been known as a powerhouse in the e-commerce industry, but in recent years, the company has been making significant strides in the field of artificial intelligence (AI). With its strong focus on AI research and development, could Alibaba be the cheap AI stock to buy in 2025?
As one of the largest e-commerce companies in the world, Alibaba has access to vast amounts of data that can be used to train AI algorithms and improve its services. The company has been investing heavily in AI technologies, including natural language processing, computer vision, and machine learning, to enhance customer experiences and drive business growth.
In addition to its core e-commerce business, Alibaba has also been expanding its reach into other industries, such as cloud computing, fintech, and healthcare, all of which can benefit from AI applications. With its diverse portfolio of businesses and strong technological capabilities, Alibaba is well-positioned to capitalize on the growing demand for AI solutions in the coming years.
Despite its strong growth potential, Alibaba’s stock price has been relatively stagnant in recent years, leading some investors to view it as a cheap investment opportunity. With its solid fundamentals, strong growth prospects, and increasing focus on AI, Alibaba could be a compelling option for investors looking to capitalize on the AI revolution in 2025.
While investing in stocks always carries risks, Alibaba’s strong position in the e-commerce and AI industries makes it a potentially attractive option for investors with a long-term horizon. As always, it’s important to conduct thorough research and analysis before making any investment decisions, but Alibaba Group Holding (BABA) could be worth considering as a cheap AI stock to buy in 2025.
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