Analyst Sees 20% Upside For Alibaba On AI Breakthrough And Positive Outlook: BABA Stock Pops Over 4% In Wednesday Pre-Market

Shares of Alibaba Group Holding Ltd. BABA climbed 4.3% during the pre-market trading session on Wednesday following the launch of its video-generation AI Model today. The stock also climbed on a positive analyst call.

What Happened: Bernstein, a prominent investment management firm, has upgraded Alibaba’s stock from ‘market perform’ to ‘Outperform’ and raised its price target by $61 to $165, CNBC reported on Wednesday. This new target indicates more than a 20% upside potential from Tuesday’s closing price.

Analyst Robin Zhu expects a continued positive sentiment around AI will fuel Alibaba’s growth. The analyst also anticipates that Alibaba’s earnings will trend upward, driven by more efficient capital allocation, a stronger AI industry structure compared to traditional cloud, and potential spillover benefits from China’s AI capital expenditure surge.

Zhu also predicts a significant increase in revenue growth for Alicloud, Alibaba’s cloud computing division, during the first two quarters of 2025.

Today, the Chinese tech giant launched its open-source video-and-image-generating artificial intelligence model Wan 2.1 amid steep competition from DeepSeek and other rivals, reported Reuters. Alibaba introduced four variants of Wan 2.1—T2V-1.3B, T2V-14B, I2V-14B-720P, and I2V-14B-480P—designed to generate images and videos from text and image inputs.

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Why It Matters: Alibaba’s AI advancements have been a key focus for the company. On Tuesday, the Chinese e-commerce giant showcased its next reasoning model, QwQ-Max, which could rival industry-leading competitors, including OpenAI's o1 and DeepSeek's R1. The Qwen team announced that QwQ-Max-Preview is free on the Qwen chatbot website.

Alibaba’s shares have already experienced a 50% increase over the past month, following the impact of Chinese startup Deepseek‘s low-cost, open-source model on U.S. tech stocks. This optimism also comes in the wake of the company’s strong fourth-quarter results last week, which led to a significant rise in share prices.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.