This week's cheapening of Alibaba's securities, as well as those of other Chinese Internet giants Baidu and JD.com, opens up a buying opportunity for investors, Barron's said. Alibaba's shares collapsed in Hong Kong in trading on Oct. 17, but its securities in the U.S. were able to go from falling to rising after Donald Trump's new comments on duties.

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Shares of Alibaba and Baidu in Hong Kong fell as much as 4.2% on Friday, while JD.com shares lost 3%. Alibaba shares have lost almost 3% of their value over the past five trading days.

"Trade tensions between the U.S. and China are having a negative impact on investor sentiment," Deutsche Bank analyst Peter Sidorov said Friday in a note quoted by Barron's.

Alibaba's American depositary receipts also declined by 2.4% in US trading, but then managed to recoup losses and grow by 0.9%. The situation was probably helped by statements by US President Donald Trump: he said that 100% duties on Chinese goods, which he threatened on October 10, cannot be "sustainable" and that he still plans to meet with Chinese President Xi Jinping in two weeks in South Korea.

Why Barron's suggests taking advantage of the downturn

Chinese technology giant Alibaba, whose core business is e-commerce, has been actively developing cloud technology and artificial intelligence in recent years. And analysts are still optimistic, writes Barron's. Since the beginning of the year, Alibaba shares have risen by 95%, and many experts believe that the upward trend may continue, the publication notes.

The securities are gradually overcoming the prolonged stagnation caused by regulatory pressure, geopolitical risks and worries about the slowdown in China's economy. A significant driver for the company's revaluation was artificial intelligence. According to company vice president Kaifu Zhang, Alibaba's online commerce business is already recouping what it spent on AI, CNBC wrote. That should temper concerns about AI ROI, which had previously held back the stock's gains, Barron's said.

"Alibaba's investment in AI goes well beyond hardware - the company is a dominant player in China's large language modeling (LLM) market," Nomura analysts Jialong Shi and Rachel Guo wrote last week. Nomura raised its target price on Alibaba shares to $215 from $170, up 30% from Thursday's closing price. The bank also reiterated a "buy" rating.

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

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