What's Going On With Alibaba Stock Friday?

Alibaba Group Holding Limited's BABA business-to-business wholesale marketplace, Alibaba.com, is set to enhance its merchant services with a new artificial intelligence (AI) tool. 

The introduction of AI-enabled SaaS for Alibaba.com merchants comes as Alibaba faces stiff competition in overseas markets, particularly from PDD Holdings Inc's PDD U.S.-based discount platform, Temu. 

This tool, part of the AI-upgraded version of OKKI, Alibaba Cloud's customer relationship management software-as-a-service (SaaS), aims to automate client-facing operations like email correspondence for foreign trade merchants. 

The AI enhancement has improved overseas client response rates by 32%, SCMP reports.

Alibaba International Digital Commerce, operating marketplaces like Lazada, AliExpress, and Alibaba.com, has emerged as one of the fastest-growing units within Alibaba Group amid slower domestic retail sales.

However, the rising popularity of Temu has significantly boosted PDD's revenue and stock performance, drawing commendation from Alibaba founder Jack Ma for PDD's strategic execution.

Meanwhile, Morgan Stanley changed its rating on Alibaba from Overweight to Equal-Weight, reducing the price target from $110 to $90. 

Since late June, this adjustment marks the first downgrade for Alibaba. Analysts, including Eddy Wang and Gary Yu, cited a slower-than-expected turnaround for Alibaba and uncertainty caused by the withdrawal of its cloud business spinoff as reasons for the downgrade, Bloomberg reports.

Conversely, Morgan Stanley has chosen PDD, known for its popular Temu marketplace, as its top pick in China's e-commerce sector, citing its alignment with consumer price sensitivity.

PDD's success in attracting customers with its aggressive pricing strategy contrasts with Alibaba's more established presence in the online shopping arena.

Additionally, Morgan Stanley removed Alibaba from its China and HK Focus List, replacing it with Aluminum Corp of China Ltd. 

Despite this downgrade, brokers remain primarily bullish on Alibaba, which still holds a substantial majority of buy ratings compared to PDD.

Price Action: BABA shares traded lower by 1.50% at $73.76 premarket on the last check Friday.

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