Alibaba vs. Amazon: Which AI Stock Do Analysts Favor Now?
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New York, NY – July 11, 2024 – Artificial intelligence (AI) is no longer a futuristic concept; it’s a core driver of growth for tech giants, particularly in the lucrative cloud computing sector. Both Alibaba (BABA) and Amazon (AMZN) are aggressively investing in AI to bolster their cloud and e-commerce businesses, and both currently hold “Strong buy” ratings from Wall Street analysts. But for investors looking to capitalize on the AI boom, the crucial question is: which stock offers greater potential for returns right now?
A recent analysis using the TipRanks Stock Comparison tool reveals diverging trajectories and analyst sentiment for these two tech behemoths. While both are positioned to benefit from the AI revolution, the current outlook leans more favorably towards Alibaba.
Alibaba: Riding the Wave of AI Momentum
Alibaba stock has experienced a remarkable surge this year, climbing over 108%. this impressive growth is fueled by robust demand for AI infrastructure, a significant increase in AI spending, and a recent strategic partnership with semiconductor leader Nvidia (NVDA). CEO Eddie Wu’s commitment to expanding the company’s AI budget to $53 billion over the next three years has further ignited investor confidence.
Analysts are taking notice. erste Group’s Hans Engel recently upgraded Alibaba from a “Hold” to a “Buy,” citing the company’s strong progress in both AI and cloud computing. Engel highlights Alibaba’s ability to monetize its AI technology through cloud services and in-house chip progress as a key driver of long-term value.
the bullish sentiment is echoed by JPMorgan’s Alex Yao, who raised his price target on Alibaba to HK$240 (from HK$165) while maintaining an “Overweight” rating.Yao points to Alibaba’s outperformance compared to its peers,driven by stronger-than-expected cloud growth and a positive outlook for its food delivery and speedy commerce segments.
Amazon: Steady Growth, But Facing Headwinds
Amazon stock, while still a solid performer, has seen a more modest increase of around 4% this year. Growth in Amazon Web Services (AWS) and expansion in grocery and retail are contributing factors, though concerns surrounding potential tariffs have introduced some headwinds. Amazon is also ramping up AI spending to enhance AWS and unlock new revenue streams, recently launching AI-powered Alexa+ devices aimed at boosting growth in Prime subscriptions, online shopping, and streaming services.
Despite these efforts,Wall Street’s enthusiasm for Amazon appears more tempered. TD Cowen analyst john Blackledge maintains a “Buy” rating with a $255 price target, anticipating strong Q3 results and positive Q4 guidance. He forecasts continued growth in AWS revenue.
The Verdict: Alibaba Offers More Immediate Upside
while Amazon remains a fundamentally strong company with significant AI investments, the current data suggests Alibaba presents a more compelling opportunity for investors seeking immediate returns. The company’s explosive growth, coupled with increasingly bullish analyst ratings and a clear strategy for AI monetization, positions it for continued success.
However, investors should remain aware of the inherent risks associated with investing in Chinese stocks, including geopolitical factors and regulatory uncertainties.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct thorough research and consult with a qualified financial advisor before making any investment decisions.
