Alibaba Group Holding Ltd (NYSE: BABA) is inching up this morning as investors continue to hail its launch of a new AI model that it claims is more powerful than OpenAI as well as DeepSeek.
The artificial intelligence assistant the company is calling Qwen 2.5-Max outperforms every renowned large language model in nearly every area.
Goldman Sachs analyst Ronald Keung has reiterated his “buy” rating on BABA shares today.
Note that Alibaba has already gained some 24% over the past three weeks.
What does the new AI model Qwen 2.5 Max mean for BABA stock?
Ronald Keung recommends loading up on Alibaba stock at current levels as it could extend its rally further to $117 by the end of 2025. His price target indicates potential for another 20% upside.
The Goldman Sachs analyst is convinced that lower-cost, super adaptable LLMs could unlock new artificial intelligence use cases.
Additionally, these models could help China-based AI companies with their broader commitment to global expansion.
BABA shares currently pay a healthy dividend yield of 2.02% as well that makes them all the more attractive to own for investors on the lookout for an additional passive source of income.
Bad news is baked into BABA shares already
Goldman Sachs is particularly bullish on the Chinese giant’s cloud business especially after it launched a software service fee in 2024.
Recent upgrades in advertising technology could also help BABA shares climb further in the coming months, analyst Ronald Keung told clients in a research note on Thursday.
The aforementioned initiatives, he’s convinced, will stabilize transaction rates and start to improve earnings as early as the current quarter.
At under $100, the New York-listed shares of the Chinese titan are already factoring in challenges, including rising competition in e-commerce, according to the investment firm.
Despite the recent surge, Alibaba’s stock price is currently down nearly 70% versus its high at the peak of the pandemic in late 2020.
Alibaba reported mixed earnings for Q3
Keung’s bullish note on Alibaba shares arrived a couple of months after the company reported its earnings for the third quarter which were mixed at best.
The company based out of Hangzhou, China saw a 4.0% decline in its adjusted per-share earnings to RMB15.06 ($2.15) in its fiscal Q3 on a 5.0% year-on-year increase in revenue to RMB236.5 billion.
Analysts, in comparison, expected a lower RMB14.79 in adjusted EPS but a higher RMB240 in revenue. At the time, chief executive Eddie Wu told investors:
This quarter, we continued to invest in the user experience and strengthen product offerings to serve our consumers. We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth.
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