The Best Growth Stock to Buy With $1,000 Right Now

Key Points

• China’s artificial intelligence industry is developing largely independently of the rest of the world’s.

• Meanwhile, like its western counterpart, China’s e-commerce market continues to grow as well despite a handful of recent (and misleading) red flags.

• No company is better positioned to capitalize on both opportunities as well as Alibaba.

• 10 stocks we like better than Alibaba Group ›

Are you struggling to find some new picks you can feel good about buying right now? If so, you're not alone. A bunch of stocks feel overbought, and seem overvalued -- particularly against the uncertain economic backdrop.

You can't simply abandon the market, though; the bigger risk remains not being invested and missing out on further upside. You'll simply want to change your tack by looking for new ideas that are a bit off the beaten path.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

And one of the best off-the-beaten-path prospects right now is arguably Alibaba (NYSE: BABA).

Image source: Getty Images.

More than mere e-commerce

There's the Alibaba you (probably) know. That's the parent to China's powerhouse e-commerce platforms Tmall and Taobao, which collectively account for nearly half of its home country's online shopping market.

Then there's the Alibaba you may not know. That's its cloud computing arm, a logistics business, and a digital entertainment operation, just to name a few. These aren't massive moneymakers; e-commerce still makes up more than 40% of the company's total top line. But they're enterprises with a great deal of growth potential. And, like Amazon here in the United States, most of these businesses support other Alibaba profit centers.

Perhaps the aspect of Alibaba that's the most exciting, however, is the one that may be the least appreciated. That's its artificial intelligence (AI) arm.

Remember the super-efficient AI-powered conversational chat app called DeepSeek-V3 that became a presumed threat to existing platforms like ChatGPT and Google's Gemini when it was introduced in January of this year? Then, do you remember the similarly efficient artificial intelligence platform, called Qwen 2.5, unveiled just a few days later? That's Alibaba's invention (although it's progressed to Qwen 3.0 in the meantime).

It's not just user-friendly Qwen in the company's AI quiver, however. Alibaba is using homegrown artificial intelligence to build tools for its e-commerce partners, like language translation, speeding up its customs processing, making its warehouses and logistics networks more efficient, and more. As is the case everywhere else in the world, Alibaba is now finding more ways to put its AI tech to work.

The thing is, none of this potential -- and likely upside -- is being reflected in this stock's price.

The bullish case

OK, it's not being completely ignored. Shares of this ADR have nearly doubled in price since last year's low of around $68.

The stock's still suspiciously well below its pandemic-inspired 2020 peak of more than $300 apiece, though. Investors remain cautious of competition, while the echoes of 2020's regulatory crackdown on most of China's technology companies are still ringing. The market may also just be unsure of exactly how or when Alibaba will be able to monetize all of the artificial intelligence developmental work it's been doing.

It's slowly but surely becoming clearer, though. In addition to all of the applications named above, for instance, the company is now working with Apple to make Qwen 3 compatible with AI-capable iPhones sold in China. Just a few days ago, Alibaba unveiled Qoder, which is software that makes it easy for developers to custom-build their own artificial intelligence-powered customer-service agents based on Alibaba's AI technology.

Alibaba is even working on its own artificial intelligence processor chips, even though it's got the option to use processing tech made by U.S. companies like Intel or Nvidia. That permission has always been tenuous at best; Beijing's preference for a completely homegrown alternative could eventually become a requirement. Alibaba is just preparing for every potential possibility.

As it should. Morgan Stanley believes China's current collective investments in AI could begin breaking even by 2028 en route to a 52% return on this investment by 2030, when the country's entire AI industry could be worth $140 billion. Alibaba is well positioned to win a share of this growth.

In the meantime, the company has a profitable e-commerce operation to keep it in the black. This business is growing, too. Mordor Intelligence says that China's e-commerce market is likely to grow at an average annualized pace of more than 10% between now and 2030.

Given all of this, analysts are looking for this profitable company's top line to grow at an average annual rate of 8% per year for the next three years.

Then there's a less quantifiable reason to take a shot on Alibaba sooner than later if you've got an extra $1,000 you're ready to put to work. That is, you'd be sidestepping much of the geopolitical and economic drama that seems to be rattling the U.S. market more and more these days.

Not for everyone, but certainly for volatility-tolerant story-stock junkies

Is Alibaba right for everyone? Probably not. The volatility this ticker has dished out since taking a turn for the better a little over a year ago is still more than many investors can tolerate, even if the gains since then have been worth it.

This is also a trade that will require a little more regular monitoring than the average holding might since the strength of the bullish argument largely depends on what the company is able to do with its AI tech (and, to a lesser degree, general cloud computing). Its e-commerce business could also be somewhat unpredictable, in light of a couple of recently disappointing retail sales reports from Beijing.

Just don't lose your bigger-picture/longer-term perspective. While July's retail sales in China fell short of the expected 4.6% improvement, they were still up 3.7% year over year on a 5.7% improvement in industrial output.

It's also worth adding that China's GDP is still expected to grow by 4.8% this year, according to the International Monetary Fund, versus expected growth of only 1.9% for the United States' economy. If nothing else, a stake in Alibaba would plug you into a company that's in the heart of an economy with more growth upside than you'll likely find here.

Just be aware that Alibaba will be releasing its quarterly results before the market opens on Friday, Aug. 29. There will likely be post-earnings fireworks -- probably bullish ones, but possibly bearish ones. As such, it wouldn't be crazy to wait until after then to dive in, just on the off chance something changes (including the stock's price).

If you're truly looking five years down the road, though, what happens on Friday isn't going to matter much either way. This company's story is just getting really good again.

Should you invest $1,000 in Alibaba Group right now?

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Intel, and Nvidia. The Motley Fool recommends Alibaba Group and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.