FOMO Builds as Alibaba Extends $250 Billion AI-Fueled Comeback

Core Viewpoint - Fund managers believe Alibaba Group Holding Ltd. has the potential to continue its $250 billion stock rally, making it a leading player in China's artificial intelligence sector [1]. Group 1: Stock Performance and Market Sentiment - Alibaba's US-listed shares have more than doubled this year, driven by investor confidence in Beijing's self-reliance vision in technology [1]. - Despite the recent rally, Alibaba's stock remains over 65% below its all-time high, while major American tech stocks have reached peak levels [1]. - Short bets on Alibaba increased last month due to concerns over the Chinese economy and market competition, but the stock's attractive price and low global fund investment levels suggest potential for further gains [2]. Group 2: Valuation and Investment Outlook - The stock is currently trading at approximately 22 times estimated forward earnings, which is double its three-year average but in line with the Hang Seng Tech Index [4]. - Alibaba's valuation is still below its peak of 29 times and current multiples for competitors like Amazon and Microsoft, making it appealing to global investors [4][5]. - Fund managers express optimism about Alibaba's upside potential, with some suggesting that the fear of missing out could drive further investment [3]. Group 3: AI Investment and Market Dynamics - A significant factor influencing stock performance is the level of investment companies are committing to AI development, with higher spending seen as a positive indicator [7]. - Concerns remain regarding the mainstream adoption of AI services and their ability to generate substantial revenues, which could impact valuations [6].