Cathie Wood bought Alibaba securities after a four-year pause

Funds managed by Cathie Wood, known for aggressive bets on breakthrough technologies, have opened positions in Alibaba after a four-year hiatus. The investment could signal Wood's return to Chinese internet companies - after her funds significantly reduced their exposure to the sector during the 2021-2022 downturn.

Wood management company ARK Investment Management said in a daily report that it bought $16.3 million worth of Alibaba American Depositary Receipts (ADRs) through two of its exchange-traded funds on Sept. 22. On Sept. 23, Alibaba securities traded in New York reached their highest level since November 2021, nearly doubling in value since the beginning of this year.

In over-the-counter trading on the U.S. Blue Ocean ATS, quotations of the e-commerce giant from China are rising by more than 6%.

Wood's first investment in Alibaba dates back to 2014 - shortly after the company's IPO. However, after September 2021, when Alibaba found itself at the center of Beijing's large-scale pressure on Internet companies, ARK funds stopped investing in the retailer and participating in shareholder meetings, Bloomberg writes, citing data from the U.S. Securities and Exchange Commission (SEC).

Alibaba is not experiencing impressive growth: revenue increased at a single-digit rate for the fourth consecutive year. Net income is no better: this year, the company has failed to meet Wall Street forecasts for two consecutive quarters. But the profitability of Alibaba's domestic e-commerce businesses - Taobao (C2C) and Tmall (B2C) - is so high that it covers the losses of the other divisions. With Alibaba stock trading at a reasonable forward P/E of 16, this already positive story could get even better if its investment spinoffs start generating revenue, notes The Motley Fool.

Three of the five companies whose securities Wood's funds bought on the first trading day of this week were Chinese: in addition to Alibaba, she invested in "China's Google" Baidu (for $2.9 million) and in robotaxi Pony AI (for $2.1 million).

Although Baidu's stock was a late entrant to China's 2025 stock market rally, it's up more than 60% in the past three months - thanks largely to Baidu's young AI chip business. Pony AI's stock has experienced sharp swings since its IPO, but is now trading nearly 60% above its offering price. The company remains unprofitable for now, but its progress in commercializing robot cabs is noteworthy, according to the website of financial analytics platform NAI Interactive.

"Wood's purchases reflect a two-pronged strategy: seeking undervalued value in established giants like Alibaba and Baidu, and betting on the breakout potential of niche leaders like Pony AI. Despite ongoing geopolitical risks, the significant correction in Chinese tech stocks has likely created long-term entry points for some investors. Notably, all three companies are linked to artificial intelligence - this is fully in line with ARK Invest's investment concept, which views AI as a transformational technology," the publication notes.

This article was AI-translated and verified by a human editor