Alibaba And Its Share Buyback Program Which Is Supported By Ryan Cohen, Microsoft Corp. Plans To Incorporate AI Tools
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Activist investor Ryan Cohen Activist investor Ryan Cohen is pushing the Chinese e-commerce giant to accelerate and further strengthen its share buyback program. Microsoft Corp. plans to incorporate AI tools such as ChatGPT into all its products and make them available as platforms for other companies.
Alibaba Share buybacks
Share buybacks can support equities by reducing the supply of traded shares and increasing earnings per share. Investors often treat them as a bullish signal because they suggest that executives are optimistic about their company's prospects and confident about its financial situation.
Cohen, with a net worth of over $2.5 billion and a stock portfolio that includes Apple Inc. and Wells Fargo & Co. and Citigroup Inc., first contacted Alibaba's management in August to voice his opinion that the company's stock is deeply undervalued based on his belief that he could achieve double-digit sales and nearly 20% free cash flow growth over the next five years.
Cohen also expressed confidence that Apple, in which he owns more than $800 million, could provide a roadmap for Alibaba. The Active Investor also expressed admiration for management's ability to drive earnings growth while accumulating high-quality assets.
While the stakes are small compared to Alibaba's market capitalization of nearly $300 billion, Cohen has a large following among individual investors who often follow in his footsteps.
Following Cohen's initial announcement, Alibaba announced in November that its board of directors had approved expanding the company's share buyback program by $15 billion to $40 billion. Cohen told Alibaba's board of directors that the share buyback plan could be increased by another $20 billion to about $60 billion.
Alibaba shares rose about 67% from a multi-year low in October. At that time, the share price was 63.22. After that, they increased from November, and the new year brought positive signals and the BABA price reached 117.01.
OpenAI and Microsoft
OpenAI has been at the center of a recent spike in artificial intelligence in the tech industry, and Microsoft is in advanced talks to increase investment in the startup.
Speaking on Tuesday at the Wall Street Journal panel at the World Economic Forum's annual event in the Swiss mountains, Nadella said his company will quickly move to commercialize OpenAI tools, the research lab behind the ChatGPT chatbot, as well as the Dall-E 2 image generator. Nadella said in in an interview that the new excitement about tools is due to the rapid growth in their capabilities last year, which he said he expects to continue. Those in office jobs engaged in so-called knowledge-based work should embrace the new tools rather than assume they'll steal their jobs, Nadella said, citing the example of computer software developers now using tools to help them generate some of the code they write.
Microsoft's CEO was also optimistic about the wider economic potential of tools like ChatGPT that can quickly generate fluent-sounding text based on short queries or prompts.
Microsoft recently said it was giving more customers access to the software behind these tools through its Azure cloud computing platform.
After falling to the level of 222.31, Microsoft stock prices are rising and recently reached the level of 239.18.
Source: wsj.com, finance.yahoo.com
