ALIBABA, BAIDU, AND TENCENT: CHINA’S AI INNOVATORS
Artificial intelligence (AI) is the future, and three Chinese tech giants are set to dominate the market, according to analysts at CLSA. With the global AI market expected to reach $1 trillion by 2026, these companies are poised to capitalize on the “lucrative potential” of AI.
China is predicted to be the world’s second-largest AI market, with a 6% share. ByteDance, Tencent, Alibaba, and Baidu are the second-largest buyers of AI chips, highlighting China’s commitment to AI development. In fact, CLSA’s analysts anticipate China’s AI computing power to increase eightfold by 2026, driven by AI cloud services.
Among these tech giants, CLSA identifies Alibaba as the leader in cloud infrastructure for large language models. They estimate that AliCloud, Alibaba’s subsidiary, will experience a 20% three-year compound annual growth rate (CAGR). Additionally, Alibaba’s international e-commerce division is expected to see accelerated revenue growth.
CLSA has given a buy call for all three companies. They have set a target price of $158 for Alibaba, representing a 78.9% upside. Baidu and Tencent are also expected to experience significant growth, with target prices of $184 and 500 Hong Kong dollars ($63.81), respectively.
Despite the impressive growth potential, these companies are currently undervalued. CLSA notes that their traditional businesses are only reflected in their low price-to-earnings (P/E) ratios. Cloud services, which offer tremendous opportunities, are essentially a “free option.” CLSA estimates Alibaba’s cloud business to be worth $94 billion, Baidu’s at $18 billion, and Tencent’s at $27 billion.
In conclusion, Alibaba, Baidu, and Tencent are positioned to lead China’s AI innovation. As the AI market continues to grow, these companies are expected to reap the benefits. With their undervalued stocks and high-profit potential, now may be the perfect time for investors to jump on board.
What do you think of China’s AI giants? Will they live up to the hype? Share your thoughts in the comments below!
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