Chinese stocks (and many of their investors) have been battered over the past few years, enduring seemingly never-ending pressure. However, despite the geopolitical risks and economic headwinds, some Wall Street analysts view select Chinese stocks as potential investments.
Amidst talks of China stimulus, the hope for an economic boost has sparked interest in a few U.S.-listed Chinese tech stocks. Let’s delve into three stocks that Wall Street thinks could gain in the coming year.
PDD (Pinduoduo)
PDD Holdings (Pinduoduo) has been one of the hottest Chinese stocks, with shares soaring more than 275% in the past two years. Despite a recent pullback, the company’s shopping app continues to gain popularity, especially with its Temu app becoming viral in the U.S. The potential impact of China’s stimulus plans adds further intrigue to PDD’s prospects.
Analysts have dubbed PDD stock as a Strong Buy, with an average price target implying 34.8% upside potential.
Alibaba (BABA)
Alibaba, on the other hand, has witnessed a decline, with shares nearing their lows. The company’s potential in leveraging generative artificial intelligence (AI) and the recent massive insider buy are factors that could sway sentiment towards the bullish side. Despite Evergrande fears, potential AI announcements could propel Alibaba forward.
Analysts rate Alibaba stock as a Strong Buy, with an average price target implying 61.2% upside potential.
Baidu (BIDU)
Baidu has been making strides with its Ernie chatbot, set to be integrated into the latest Samsung Galaxy S24 smartphones. This strategic partnership could be a game-changer for the company, overshadowing recent Evergrande liquidation news. While the company might seem undervalued, potential geopolitical risks and the need for stimulus to invigorate China’s economy should be taken into account.
Analysts regard Baidu stock as a Strong Buy, with an average price target implying 53.4% upside potential.
While prevailing turbulence and negative economic headlines cast doubt on China’s tech plays, these stocks present deep value opportunities in the grander scheme of things. Among the three Strong Buy-rated stocks, analysts see the most upside potential in BABA (61.2%) for the year ahead.
