Alibaba stock (NYSE:BABA) increased more than 3% on Monday after Morgan Stanley analysts selected the Chinese Internet and e-commerce behemoth as their top tech sector pick.
The Morgan Stanley team, led by analyst Gary Yu, claimed that due to Alibaba’s retail dominance in sectors like consumer goods like apparel and cosmetics, investors have “underappreciated Alibaba’s leverage to a consumption rebound in China.” Yu also predicted that non-Internet businesses will largely be responsible for Alibaba’s (BABA) cloud business revenue starting to increase again in the first quarter of 2024.
A “major benefactor of [an] easing regulatory climate” in China, according to Yu, is Alibaba (NYSE:BABA), as Beijing has shown signs of easing up on its two-year-long crackdown on the operations of businesses like Alibaba (NYSE:BABA).
Since Alibaba has been a focus for the previous one to two years, Yu added, “we think it could outperform other Chinese Internet firms when the atmosphere eases.”
Any “possible favorable regulatory event affecting Ant [Group],” such as a reorganization, licensing, or the restart of Ant’s potential IPO, Yu continued, “may be a huge positive stimulus” for Alibaba (NYSE:BABA).
Alibaba Stock Price Outlook
On Alibaba’s (NYSE:BABA) stock, Yu has an outperform rating and a $150 per-share price objective. As a result, Jack Ma, the public face of Alibaba (BABA), gave up his ownership stake in Ant, which was slated to go public in 2020 before Ma’s criticism of the Chinese government put him in conflict with Beijing officials, Alibaba’s (BABA) shares in Hong Kong saw a significant increase on Sunday.
Then, as part of a larger initiative to combat anticompetitive activities in online commerce, including the alleged pressure placed on merchants to list their products on a single online platform, China’s State Administration for Market Regulation opened an investigation against Alibaba.
Soon after, when authorities started to tighten their control over what they perceived as excessive earnings and outsized influence from some of the biggest IT organizations in the country, Ma’s hold over the business and his public persona started to wane.
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