Can Alibaba Group Holding Ltd. (BABA) Benefit from Investments in Generative AI?

First Eagle Investments, an investment management company, released its “First Eagle Global Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Class A shares of the fund returned 7.23% in the second quarter of 2025. All regions contributed to the overall performance. North America and developed Europe were the top contributors, whereas Japan and developed Asia, excluding Japan, lagged. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, First Eagle Global Fund highlighted stocks such as Alibaba Group Holding Limited (NYSE:BABA). Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing reach. The one-month return of Alibaba Group Holding Limited (NYSE:BABA) was -0.88%, and its shares gained 47.58% of their value over the last 52 weeks. On August 28, 2025, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $119.57 per share, with a market capitalization of $285.062 billion.

First Eagle Global Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2025 investor letter:

"Shares of Chinese technology giant Alibaba Group Holding Limited (NYSE:BABA) traded down following strong first quarter performance. While the company reported revenue and profit growth for its most recent quarter, results narrowly missed consensus expectations. We believe that Alibaba is well positioned to benefit from Chinese investment in generative artificial intelligence (AI). The company also continues to invest in growing its businesses and improving operating efficiencies, even as it returns cash to shareholders through dividends and stock repurchases."

Alibaba Group Holding Limited (NYSE:BABA) is in 17th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 101 hedge fund portfolios held Alibaba Group Holding Limited (NYSE:BABA) at the end of the first quarter, which was 125 in the previous quarter. While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Alibaba Group Holding Limited (NYSE:BABA) and shared the list of most profitable tech stocks to invest in. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.