Alibaba Group Holding Limited (NYSE:BABA) is one of the AI Stocks Gaining Attention on Wall Street. On January 6, Freedom Capital downgraded the stock to “Hold” from Buy with a price target of $180, up from $140. The downgrade follows BABA’s quarterly results, with analysts highlighting rising capex and cost pressures offsetting cloud momentum.
The firm noted how Alibaba reported quarterly results that were above expectations. While its cloud segment continues to demonstrate massive growth and acts as a key driver for the stock, it comes at the cost of rapidly rising capital expenditures. The very expenditures whose payback prospects remain uncertain.
The company’s retail business, on the other hand, showed moderate growth compared to ecommerce peers. As such, the main factor that is going to make or break BABA’s performance in the coming quarters is its ability to expand both retail and cloud operations without a steep increase in related costs, analysts noted.
“We lower our rating to a ‘Hold’ recommendation and raise our price target for BABA from $140 to $180.”
Alibaba Group Holding Limited (NYSE:BABA) is an internet giant that offers e-commerce services in China and internationally.
While we acknowledge the potential of BABA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 11 AI Stocks on the Market’s Radar and 10 AI Stocks Analysts Are Watching Closely
Disclosure: None.
