This Unsung AI Stock Is Breaking Out By Sean Michael Cummings, analyst, True Wealth
A new ChatGPT killer has just hit the scene... If you've been following the developments in artificial-intelligence ("AI") software, you're well aware of ChatGPT – the online chatbot created by OpenAI. While OpenAI runs the most popular AI chatbot on the market, it's not the only option out there. And its competitors excel at different tasks... For example, Claude 3's Opus chatbot – created by OpenAI's rival Anthropic – outperforms ChatGPT in graduate-level reasoning and other tasks. And Google's Gemini uses real-time Internet searches, which keeps it more updated than ChatGPT. Today, a new challenger is making noise in the AI-chatbot market. This company's model has ChatGPT beat at various high-level tasks. And as I'll explain, its stock is in a new, noteworthy uptrend...
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The company I'm talking about is the "Amazon of China" – Alibaba (BABA). This $195 billion giant does it all. It has segments in e-commerce, retail, technology, Internet, movies, and more. In April 2023, Alibaba released its AI chatbot called Tongyi Qianwen. And it seems the bot's newest model, Qwen2.5, has leapfrogged ChatGPT. According to AI-benchmark group OpenCompass, the Qwen model outperforms OpenAI's chatbot in both language and reasoning. Qwen poses major competition to ChatGPT. It has already seen 90,000 adoptions by companies across various industries. But unlike OpenAI, Alibaba is a publicly traded company. That means investors can buy BABA shares to benefit from the AI tailwinds that are forming behind it. And right now, the timing looks especially promising. See, for the first time since September 2023, BABA shares are back in an uptrend. We can see this shift using BABA's 200-day moving average (200-DMA). This indicator shows a rolling average of the past 200 days of prices. It removes the noise of daily price moves and lets us see the overall price trend instead. When an asset's daily price breaks out above its 200-DMA, it shows us that daily prices are jumping relative to the long-term trend. It's a bullish signal that tends to lead to more gains. And it's exactly what we're seeing with BABA today. Take a look... 
As you can see, BABA hasn't pierced its 200-DMA for the better part of a year. I wanted to find out what this kind of breakout meant for future returns. So I examined every other time BABA broke out above its 200-DMA to see how the stock performed from there. It's rare for BABA to overtake its 200-DMA. Since 2014, this price action has only occurred on 1.5% of days. But history shows buying after this signal leads to terrific performance. Check it out... 
BABA has underperformed in the long term, returning just 2% in an average year. But buying after the stock breaks above its 200-DMA can significantly boost returns... This signal led to 3% returns in an average six-month period... and that gain jumped to 19% after a year. That's why it's so important to wait for the uptrend. It's a way to avoid false starts and make sure prices are moving in the right direction... And if you buy stocks with momentum, that's when they can really take off. Today, BABA is on a hot streak. So if you're interested in this technology, don't overlook this unsung AI challenger... History shows it's likely worth considering right now. Good investing, Sean Michael Cummings Further Reading You don't need to back the biggest industry players to win big. Take the AI revolution, for example. Many businesses stand to benefit from this boom. And because the market isn't excited about them yet, they might offer even more advantages as investments... Read more here. AI and cryptocurrencies use a massive amount of electricity. Demand is only going to increase in the coming years... And that's good news for one "boring" sector. What's more, one powerful investing tool just turned bullish on this space... Learn more here. |
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L3Harris Technologies (LHX)... "offense" contractor
Morgan Stanley (MS)... financial giant
Goldman Sachs (GS)... financial giant
Markel (MKL)... insurance
AstraZeneca (AZN)... pharmaceuticals
GSK (GSK)... pharmaceuticals
Amazon (AMZN)... online-retail king
Pinterest (PINS)... image-board sharing
Garmin (GRMN)... GPS and wearables
Procter & Gamble (PG)... consumer goods
Colgate-Palmolive (CL)... household goods
International Flavors & Fragrances (IFF)... flavors and scents
Cintas (CTAS)... uniforms
Trane Technologies (TT)... HVAC manufacturer
Ryder System (R)... logistics
Motorola Solutions (MSI)... telecom
Duke Energy (DUK)... utilities
Suncor Energy (SU)... oil and gas
Agnico Eagle Mines (AEM)... gold NEW LOWS OF NOTE LAST WEEK Teladoc Health (TDOC)... virtual health care
CVS Health (CVS)... drugstores and vaccines
Walgreens Boots Alliance (WBA)... retail pharmacy
Sony (SONY)... gadgets and entertainment
Starbucks (SBUX)... coffee "World Dominator"
Papa John's (PZZA)... pizza
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