For well over a year, Michael Burry’s massive Alibaba (NYSE: BABA) stake – estimated at $21 million in the latest available 13-f filing – has been a highly contentious stock investment.
Throughout the quarters, ‘The Big Short’ investor has been steadily increasing his holding, BABA shares have been fluctuating in value, taking the legendary short trader from a significant profit to a loss to likely remaining even.
Why Michael Burry might soon have an immense return on his BABA stock investment
Alibaba’s release of its new artificial intelligence (AI) model, Qwen 2.5, might profoundly alter the situation and – judging by BABA’s Tuesday and overnight performance – may have already done so.
Picks for you
Specifically, the week that started on Monday, January 27, is shaping up to be transformative for the technology sector as two highly advanced Chinese AI models arrived at the scene, creating stiff competition for the market leaders OpenAI, Anthropic, Alphabet (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Elon Musk’s xAI.
Investors swiftly reacted to the unleashing of Qwen 2.5 and, at press time on January 29, Alibaba shares have risen to $96.68 – a 13.41% gain in the last full week of trading.
The rise – and the accompanying spike in volume – have simultaneously ensured that BABA stock is trading at highs not seen since early November 2024.
Why Alibaba stock is surging
The substantial inflows can be traced to the sheer disruption caused by the other Chinese AI platform, DeepSeek, as well as the fact that Alibaba claims its own offering is even more advanced.
DeepSeek is generally considered on par with one of the most popular artificial intelligence platforms, ChatGPT, and, despite being free to use, boasts the ability to search the live internet and use advanced reasoning akin to OpenAI’s o1 version.
The release was particularly controversial due to its reported low costs – especially compared to western AI – as well as the fact that the processes and tools used to develop and train it can be freely replicated by anyone in the world.
Such a setup caused an uproar in Silicon Valley, with some pundits postulating it might prove an ‘extinction’ event for many venture capitalist firms, and with investors executing a sell-off leading to Nvidia (NASDAQ: NVDA) setting a new record in terms of a one-day market capitalization collapse.
Western technology firms set to benefit from Chinese breakthroughs
Multiple experts have, however, come out insisting that the market reaction to the development has been entirely misguided and that, rather than a hindrance, the arrival of new models such as DeepSeek and Alibaba’s Qwen 2.5 will prove a long-term benefit.
For example, Meta’s (NASDAQ: META) Yann LeCun pointed out that the recently-announced $500 billion AI infrastructure investment remains sound as it will yield exceptional long-term benefits as the adoption and capabilities of the technology advance.
Elsewhere, the arrival of new and stiffer competition had already yielded benefits to consumers as OpenAI’s Sam Altman announced new features for his platform’s paying customers already on January 26.
How much is Michael Burry up on his Alibaba stock bet?
As for Michael Burry, it is difficult to say just how much money was made with BABA stock’s sudden surge – and indeed, if any money was made at all as his fourth-quarter (Q4) stake will be known only in mid-February – but it is clear the majority of his investment would be significantly adobe the buying price.
Still, investors should not be surprised if the total valuation of ‘The Big Short’ investor’s Alibaba stake proves lower than in the Q3 filing as the Chinese market was flying high on the last day of the trimester – September 30 – due to the anticipated stock market stimuli in the East Asian country.
Disclaimer: The featured image in this article is for illustrative purposes only and may not accurately reflect the true likeness of the individuals depicted.
