Alibaba AI business undervalued, says First Eagle Fund.

First Eagle Fund, managing $17 billion, asserts that Alibaba Group Holdings Ltd.'s current share price fails to account for the significant potential of its artificial intelligence business. According to the fund manager, the market valuation primarily reflects Alibaba's established e-commerce operations, effectively treating its burgeoning AI segment as a "free call option." This perspective suggests that investors are not adequately pricing in the future growth and profitability that Alibaba's AI ventures could generate, implying a substantial upside for the stock. The fund's analysis highlights the strategic importance of Alibaba's investments in AI, which span various applications from cloud computing to smart logistics and consumer services, positioning the company for long-term technological leadership. This perceived undervaluation presents an attractive opportunity for investors who recognize the long-term value creation from the company's advanced technological capabilities beyond its core retail business, potentially leading to a re-rating of the stock as its AI contributions become more apparent to the broader market.