Alibaba Enters the Chip Game With Yitian 710

Yitian 710 will be used to power Alibaba's Panjiu server

Deputy Editor
Oct 19, 2021 at 11:21 AM
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The shares of Alibaba Group Holding Ltd (NYSE:BABA) are up 3.5% at $172.73 this morning, after the China-based tech company's latest chip launch. This processor, called the Yitian 710, will be used in the firm's Panjiu servers, and will not be available for use outside of Alibaba. The announcement comes as cloud computing players have been urged by the Chinese government to invest in the nation's chip sector, which is still behind that of other countries.

The stock remains down 25.8% year-to-date, but looks to have found its bottom near the $139 level, which helped contain some of BABA's pullback in 2018. The equity has now overcome recent pressure at the 60-day moving average, however, as well as a short-term ceiling at the $170 mark. For the month, BABA sports a 16.7% lead. 

The equity is brushing off a price-target cut from Atlantic Equities, too, after the analyst slashed its price objective to $250 from $290. The 12-month consensus price target of $243.31 still represents a 40.7% premium to current levels, though. Plus, just one of the 14 analysts in coverage consider BABA a "hold," while the remaining 13 call it a "buy" or better. 

Options traders are singing a different tune. This is per the equity's Schaeffer's put/call open interest ratio (SOIR), which stands in the 80th percentile of its 12-month range. A SOIR this high means short-term options traders have rarerly been more put-biased in the past year. 

 

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