Analyst Sees 20% Upside for Alibaba on AI Breakthrough and Positive Outlook: BABA Stock Pops Over 4% in Pre-Market

Shares of Alibaba Group Holding Ltd. (NYSE:BABA) surged 4.3% during the pre-market trading session on Wednesday, following the launch of its video-generation AI model. The stock also climbed on the back of a positive analyst call.

### What Happened

Bernstein, a prominent investment management firm, upgraded Alibaba’s stock from ‘market perform’ to ‘Outperform’ and raised its price target by $61 to $165 Price Target Raised to $190.00](https://www.etfdailynews.com/…/alibaba-group-nysebaba…/). This new target indicates more than a 20% upside potential from Tuesday’s closing price.

Analyst Robin Zhu expects continued positive sentiment around AI to fuel Alibaba’s growth. Zhu also anticipates that Alibaba’s earnings will trend upward, driven by more efficient capital allocation, a stronger AI industry structure compared to traditional cloud, and potential spillover benefits from China’s AI capital expenditure surge.

Zhu predicts a significant increase in revenue growth for Alicloud, Alibaba’s cloud computing division, during the first two quarters of 2025 Stock Price](https://www.etfdailynews.com/…/bank-of-america-issues…/).

### AI Advancements

On Wednesday, Alibaba launched its open-source video-and-image-generating artificial intelligence model Wan 2.1, amid steep competition from DeepSeek and other rivals. Alibaba introduced four variants of Wan 2.1—T2V-1.3B, T2V-14B, I2V-14B-720P, and I2V-14B-480P—designed to generate images and videos from text and image inputs.

### Why It Matters

Alibaba’s AI advancements have been a key focus for the company. On Tuesday, the Chinese e-commerce giant showcased its next reasoning model, QwQ-Max, which could rival industry-leading competitors, including OpenAI’s o1 and DeepSeek’s R1. The Qwen team announced that QwQ-Max-Preview is free on the Qwen chatbot website.

Alibaba’s shares have already experienced a 50% increase over the past month, following the impact of Chinese startup DeepSeek‘s low-cost, open-source model on U.S. tech stocks. This optimism also comes in the wake of the company’s strong fourth-quarter results last week, which led to a significant rise in share prices.

### Conclusion

With the launch of its new AI model and positive analyst outlook, Alibaba is poised for significant growth. The company’s strategic investments in AI and cloud infrastructure are expected to drive its future success, making it a stock to watch in the coming months.