Shares of Chinese e-commerce giant Alibaba (BABA) jumped over 8% on Tuesday after reports revealed that Nvidia (NVDA) would resume sales of its H20 AI chips in China. In a new note, Jefferies called the move a key turning point for China’s internet and AI sector, which has been under pressure from U.S. chip restrictions.\n\nThe firm named six stocks which could benefit from the improved chip outlook: Alibaba, Tencent (TCEHY), Baidu (BIDU), Kingsoft Cloud, Kuaishou, and Meitu. Of these, Alibaba seems best positioned to lead the rebound, according to Jefferies.\n\nJefferies sees Alibaba as one of the top names to watch in China’s AI space to benefit as chip supply improves and cloud spending continues. The firm raised the company’s June-quarter forecast for Alibaba Cloud’s revenue growth to 23%, up from an earlier 20%. The boost comes as Alibaba continues to post strong results in AI-related services, with triple-digit growth now reported for seven quarters in a row. In the Q4 FY25 earnings call, cloud revenue jumped 18% year-over-year to RMB30.1 billion, supported by robust growth in AI-related product sales.\n\nJefferies also pointed to Alibaba’s steady capital spending as a key strength. Earlier this year, Alibaba announced a $53 billion plan to grow its AI and cloud business over the next three years. Since then, it has opened its third data center in Malaysia and plans to launch another in the Philippines by October 2025.\n\nThese initiatives should help Alibaba reach more users and offer faster cloud and AI services both in China and worldwide.\n\nAnalysts remain highly bullish about Alibaba’s stock trajectory. With 13 Buy ratings and one Hold rating, BABA stock commands a Strong Buy consensus rating on TipRanks. Also, the average Alibaba price target of $154.09 implies about 31.7% upside potential from current levels.

‘Time to Bet on Alibaba Stock,’ Says Jefferies as NVDA Resumes AI Chip Supply in China

Alibaba's shares rose over 8% after reports that Nvidia would resume AI chip sales in China, prompting Jefferies to highlight the move as a turning point for China's AI sector. The firm recommended six stocks, with Alibaba positioned to lead the rebound due to improved chip supply and cloud spending. Jefferies raised Alibaba's revenue growth forecast to 23% and noted its strong AI-related cloud revenue growth. Alibaba also announced a $53 billion AI/cloud expansion plan, including new data centers in Malaysia and the Philippines.