BABA is a buy for valuation and cloud/AI growth; size smaller than US mega-caps due to geopolitical risk.

And that leads us to stock number four, which is going to be Alibaba. Stock ticker BABA. And I know this stock is going to give some investors some concern and make them feel uncomfortable.

It's China, geopolitical risk, government intervention, consumer weakness. There are legitimate risks here. I'm not ignoring them. But that's also why the valuation opportunity exists.

Alibaba gives us exposure to several major themes. Chinese e-commerce, cloud computing, artificial intelligence, international commerce, and improving shareholder returns. What I think investors sometimes forget is that China doesn't need to suddenly become the world's strongest economy or fastest growing for Alibaba to work.

The bar is much lower. If China's economy simply stabilizes, consumer confidence improves, cloud demand continues accelerating, and Alibaba continues monetizing AI, the earning story could improve considerably.

AI is the gamecher for Alibaba. It isn't simply an e-commerce company anymore. Cloud and AI are becoming increasingly important. And if Chinese companies accelerate adoption of generative AI, I mean, we're talking big-time earnings.

Alibaba cloud could become one of the biggest domestic beneficiaries. In the most recent quarter alone, Alibaba's cloud business grew 45% year-over-year. Cloud Ibida grew 133%.

And AI related revenues saw tripledigit growth for the 12th consecutive quarter.

I know people are out there saying, "Well, I can't invest in China." Or if you're looking at a tobacco company, I can't buy tobacco companies. But remember, we're here to make money, and you could break down many companies to find some negative factors.

So, I view Baba as e-commerce plus cloud plus AI plus China recovery optionality. But again, the geopolitical discount is real. That's why I wouldn't size Alibaba like a US mega cap company.

And if you're thinking some of the major AI players in the US have been played out, it's important to look elsewhere.

And analysts remain upbeat on the stock, giving it a 12-month price target of $183 per share, implying 54% upside from current levels.

Baba, that's China, cloud and AI.