Jefferies Sees Alibaba Stock as a Top Pick Amid Improved Chip Supply in China.

Jefferies believes it's time to bet on Alibaba stock as Nvidia resumes AI chip sales in China. The firm sees Alibaba as one of the top names to watch in China's AI space, with strong results in AI-related services and steady capital spending. Jefferies raised Alibaba Cloud's revenue growth forecast to 23% and named six stocks that could benefit from improved chip supply, with Alibaba leading the rebound. Analysts remain highly bullish about Alibaba's stock trajectory, with a Strong Buy consensus rating and an average price target of $154.09, implying 31.7% upside potential.

Shares of Chinese e-commerce giant Alibaba (BABA) surged over 8% on Tuesday following reports that Nvidia (NVDA) would resume sales of its H20 AI chips in China. Jefferies, a leading financial services firm, has named Alibaba as one of the top beneficiaries of this development, highlighting its strong position in China's AI sector.

According to Jefferies, the resumption of AI chip sales by Nvidia marks a significant turning point for China's internet and AI sector, which has been under pressure from U.S. chip restrictions. The firm expects Alibaba Cloud's revenue growth to reach 23% in the June quarter, up from an earlier forecast of 20% [1]. This growth is driven by Alibaba's robust performance in AI-related services, with triple-digit growth reported for seven consecutive quarters [1].

Jefferies also pointed to Alibaba's steady capital spending as a key strength. The company recently announced a $53 billion plan to grow its AI and cloud business over the next three years. This initiative includes the opening of a third data center in Malaysia and plans to launch another in the Philippines by October 2025 [1]. These expansions aim to reach more users and offer faster cloud and AI services both in China and globally.

Analysts remain highly bullish about Alibaba's stock trajectory. With 13 Buy ratings and one Hold rating, BABA stock commands a Strong Buy consensus rating on TipRanks. The average price target of $154.09 implies about 31.7% upside potential from current levels [1].

In addition to Alibaba, Jefferies identified six other stocks that could benefit from the improved chip outlook: Tencent (TCEHY), Baidu (BIDU), Kingsoft Cloud, Kuaishou, and Meitu. However, Alibaba seems best positioned to lead the rebound [1].

Nvidia's announcement that it would resume sales of its H20 AI chips to China is a significant development for the tech giant. The move follows the U.S. government's assurance that licenses will be granted, allowing Nvidia to start deliveries soon [2]. This news is expected to boost Nvidia's financial results and stock price, as the Chinese market is a significant revenue contributor for the company.

In conclusion, the resumption of Nvidia's H20 AI chip sales in China presents a positive outlook for Alibaba and other Chinese AI companies. With strong AI-related services and steady capital spending, Alibaba is well-positioned to capitalize on this development and drive further growth.

References:
[1] https://www.tipranks.com/news/time-to-bet-on-alibaba-stock-says-jefferies-as-resumes-ai-chip-supply-in-china
[2] https://www.fool.com/investing/2025/07/15/nvda-stock-china-ai-chip-sales-resume/