Alibaba AI Business Is ‘Free Call Option,’ First Eagle Fund Says

March 19, 2026 - 11:24

A major investment fund is highlighting a significant gap between Alibaba's current market valuation and its future potential in artificial intelligence. According to the manager of a $17 billion fund, the Chinese tech giant's share price appears to reflect only the value of its core e-commerce and cloud computing businesses, entirely overlooking its burgeoning AI ventures.

This perspective positions Alibaba's advanced work in artificial intelligence as a compelling "free call option" for investors. The term suggests that the market is not currently paying for this aspect of the business, meaning any substantial success or monetization in AI could unlock pure upside value that is not yet priced into the stock.

The fund's analysis points to Alibaba's substantial investments in AI research, large language models, and enterprise AI solutions as key assets. These technologies are seen as critical drivers for future growth, potentially revolutionizing its existing services and creating new revenue streams. This outlook underscores a broader debate about how to value traditional tech giants that are aggressively pivoting to harness the transformative power of next-generation artificial intelligence.