Analysts name 4 alternatives to Alibaba in China’s tech sector

China’s stocks bounced back in recent months on the back of the country’s reopening—and that’s gotten investors excited about tech. No Chinese tech stock has generated as much excitement as Alibaba, one of the most recognizable names in the Chinese internet sector. The stock is a hot favorite among Wall Street analysts, with the likes of Morgan Stanley naming Alibaba its “top pick” in the Chinese tech sector for the first time in three years, and Goldman Sachs added the tech giant to its conviction list over the last month. Shares of Alibaba are up about 24% this year — more than double the rebound in the Nasdaq Composite and the Hang Seng Tech Index. While that makes for impressive reading on paper, a 6.5% slump in the tech giant’s share price over the last five trading sessions — which collectively wiped out more than $20 billion in the company’s market capitalization — has raised concerns that the rally is fizzling out. Analysts think there is still upside to Alibaba’s share price, however. More than 76% of analysts covering the stock rate it a “buy,” giving it average upside of 31%, according to FactSet data. But Alibaba isn’t the only game in town. CNBC Pro screened the KraneShares CSI China Internet ETF in search of other opportunities to play the popular sector. The exchange-traded fund, which is traded on the New York Stock Exchange, is a popular instrument among investors seeking broad exposure to the sector. These stocks are buy rated by the majority of analysts covering them and have average potential upside of at least 20% over the next 12 months. Stocks that made the screen Kuaishou Technology made the list. Kuaishou, known for its short video-sharing function, is one of Bernstein’s top China stock picks for the next six months. “Kuaishou has ranked among the outperformers on the Internet since the beginning of the reopening rally in China. The company continues to see solid engagement growth, and margins should continue to show improvement,” Bernstein analyst Ann Larson wrote in a note on Jan. 30. Bernstein’s bullishness comes despite the 3% decline in Kuaishou’s share price this year. The bank’s price target of 90 Hong Kong dollars ($11.50) on the stock is a notch higher than the consensus estimate of around 88 Hong Kong dollars. Kuaishou is rated buy or overweight by 94% of analysts covering the stock, who give it average upside of around 24.4%. E-commerce giant also turned up on the screen. The company is set to shutter its e-commerce services in Indonesia and Thailand in March in a retreat from Southeast Asia, according to a Reuters report, in an apparent pivot to being a logistics-focused player. But the stock is still a favorite analyst. It is rated buy by 88% of analysts covering it, and has average upside of 37.7%, according to FactSet data. Also making the screen is search engine company Baidu, with average upside of 12.8%. The company is planning to roll out an artificial intelligence chatbot service similar to OpenAI’s ChatGPT in March, according to various media reports. Rounding off the list is food delivery giant Meituan, with average upside of 32.5%.

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