The Chinese stock market has been a dubious investment for years, as major indices in the country recorded massive losses.
The situation began changing in September 2024 and by early 2025, appears to have mostly reversed.
In this climate, Alibaba (NYSE: BABA) — Michael Burry’s biggest position per the latest available 13-f filing — enjoyed a major rally and, even more recently, received a massive price target upgrade from one of America’s biggest financial institutions, Morgan Stanley (NYSE: MS).
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Specifically, Morgan Stanley’s Gary Yu abandoned the previous BABA stock forecast of $100 in favor of a substantially higher $180, effectively predicting a 27.79% rally in 2025 from the shares’ press time price of $140.85.
The upgrade was justified by Alibaba’s own improved outlook and artificial intelligence (AI) exposure, but also by the seemingly improved conditions in the Chinese economy, as the same analyst also raised the outlook for the internet industry to favorable.
The reassessment was driven by what appears to be a shift in the sector from a focus on consumption to a focus on technological advancements.
Why China’s internet industry is headed for a rally
The new price target and the broader outlook came mere weeks after the release of the novel DeepSeek AI model profoundly shook Silicon Valley.
Though DeepSeek’s reported $6 million price tag — arguably the model’s most disruptive element — has been repeatedly called into question, its existence nonetheless removed what was previously a monopoly industry for the U.S.’ big tech sector.
Alibaba was also quick to join the tumult as it unveiled its own novel AI model, Qwen 2.5, in a move that arguably kickstarted the sequence of events that led to the latest major price target upgrade and began BABA shares’ strong rally.
Still, it is worth pointing out that the reversal in the Chinese stock markets isn’t entirely linked to the latest technological developments. Though the September surge, driven by the hopes for the announced government equity stimulus, failed to persist long-term, it helped the indices wake from their stupor.
For example, even after the correction, as more details about the government injection came to light, the CSI 300 index rose a total of 19.91% in September and October, while Hong Kong’s HSI rallied 15.60% within the same time frame.
Why Alibaba stock is likely to trade higher in 2025
Despite the rally that has already taken place — and despite the broader factors impacting the Chinese market — BABA shares may be set to continue their rally.
In a move strongly reminiscent of The Stargate Project, a $500 AI infrastructure investment platform announced by President Donald Trump and headed by industry leaders such as OpenAI, Alibaba announced its own $53 billion investment in a similar program in the coming three years.
Burry’s most controversial stock bet turns into the most lucrative
As for Michael Burry, the stimulus paired with the AI rally quickly turned his most controversial stock pick of 2024 into his most successful major holding of 2025.
Additionally, the overall tailwinds in the Chinese market led to The Big Short investor making approximately $12.4 million between New Year’s Day and February 21 on his three biggest positions, as Finbold previously reported.
Disclaimer: The featured image in this article is for illustrative purposes only and may not accurately reflect the true likeness of the individuals depicted.
