True Diversification Through International Stocks: Alibaba, Nu Holdings, and Mercado Libre

True diversification means investing across different countries and regions, according to Ray Dalio. Alibaba Group (BABA) and Nu Holdings Ltd. (NU) offer exposure to China and Brazil, respectively. Alibaba is a data center and cloud computing play with a strong financial profile, delivering a 42.2% net rally in 2025. Nu Holdings represents a Brazilian finance platform addressing the needs of a growing middle class. Both stocks offer potential upside and risk management opportunities.

Title: True Diversification in Action: Alibaba Group and Nu Holdings

True diversification, as advocated by Ray Dalio, involves investing across different countries and regions to manage risks and capitalize on growth opportunities. Two companies that exemplify this strategy are Alibaba Group (BABA) and Nu Holdings Ltd. (NU), offering exposure to China and Brazil, respectively.

Alibaba Group (BABA)

Alibaba Group, a Chinese tech giant, has been a contentious name in the market since 2022. Despite market sentiment, Alibaba has delivered stellar financial results. In 2025, the stock has experienced a 42.2% net rally, driven by robust earnings, increased free cash flow, and strategic expansions into data centers and cloud computing [1].

Alibaba's growth extends beyond its traditional e-commerce platform. As a data center and cloud computing player, it taps into the burgeoning consumer discretionary sector in Asia. This positioning provides Alibaba with a competitive edge, as it capitalizes on the growing demand for cloud services in the region.

Wall Street analysts are optimistic about Alibaba's prospects. The consensus rating is a "Moderate Buy" with a target price of $159.7 per share, implying a potential upside of 32.5% from current levels [1]. This valuation represents a fraction of Alibaba's all-time high of $300 per share during the peak of the COVID-19 pandemic.

Nu Holdings Ltd. (NU)

Nu Holdings represents a Brazilian finance platform that caters to the growing middle class, offering a modern alternative to traditional banking. As Brazil's economy continues to grow, Nu Holdings is poised to benefit from increased demand for financial services [1].

Institutional investors have taken notice of Nu Holdings' potential. State Street Corp, for instance, has increased its holdings in Nu stock by 2.4% as of mid-August 2025, now holding a net position of $1.25 billion or 1.9% ownership in the company [1]. This investment reflects confidence in Nu Holdings' ability to address the financial needs of Brazil's expanding middle class.

Analysts are bullish on Nu Holdings' prospects. The consensus rating is a "Moderate Buy" with a target price of $15.8 per share. One analyst, Itau BBA Securities, has an "Outperform" rating with a valuation of $18 per share, suggesting an additional upside potential of 36% from today's trading price [1].

Conclusion

Alibaba Group and Nu Holdings Ltd. offer investors a pathway to true diversification by providing exposure to China and Brazil. Both companies have demonstrated strong financial performance and growth potential. While Alibaba is a leader in data centers and cloud computing, Nu Holdings is addressing the financial needs of Brazil's growing middle class. These investments present potential upside and risk management opportunities for investors seeking diversification.

References

[1] https://www.nasdaq.com/articles/true-diversification-3-stocks-you-can-buy-now
[2] https://www.marketbeat.com/instant-alerts/filing-carmignac-gestion-lowers-holdings-in-alibaba-group-holding-limited-baba-2025-08-20/