Amazon (NASDAQ:AMZN) retains its throne in the realm of e-commerce, while Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) continues to reign over the domain of search advertising. Amidst these titans, the search for the next Amazon or Google seems like searching for a needle in a haystack.
Considering U.S.-based tech companies, the emergence of a new powerhouse akin to Amazon or Google appears highly unlikely. While companies like Palantir Technologies (NASDAQ:PLTR) could lead in specialized sectors such as AI enterprise software, envisioning a new e-commerce or search advertising giant originating from the U.S. seems bleak.
However, shifting the spotlight to notable international tech companies unveils a few hidden gems with the potential to become the next Amazon or Google. Let’s delve into each contender to understand their prospects.
Alibaba Group (BABA)
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Alibaba Group (NYSE:BABA) has long been hailed as China’s reply to Amazon. However, investor faith in BABA has significantly dwindled in recent years.
The challenging landscape of China’s tech regulations and the impact of the country’s stringent “Zero COVID” policies during 2022 and 2023 have taken a toll on Alibaba’s financial performance and its stock price.
Despite the downward spiral in share value from over $300 to the low-$70s since 2020, now might just be the opportune moment to consider a long-term investment in BABA stock. Although the current valuation (8.5 times forward earnings) aligns with predictions of minimal earnings growth in the coming fiscal year (ending March 2025).
Should China’s economic hurdles ease, Alibaba stands poised for a growth resurgence that could herald a market revaluation. As highlighted by InvestorPlace’s Alex Siriois, Alibaba’s foray into generative AI presents a promising realm for growth catalysts within BABA.
Baidu (BIDU)
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Often dubbed as “China’s Google,” Baidu (NASDAQ:BIDU) has borne this moniker since its inception nearly two decades ago.
While skeptics may believe that the window of opportunity for BIDU stock to ascend to the echelons of Amazon or Google has passed, recent developments suggest otherwise.
Despite its tagline, “China’s Google,” Baidu ($36.4 billion) lags significantly behind Alphabet ($1.85 trillion) in terms of market capitalization. Nonetheless, signs of rejuvenation in Baidu’s growth trajectory begin to surface.
The initial success witnessed in its generative AI ventures, including the revenue-generating chatbot Ernie Bot, heralds a potential transformation in Baidu’s fortunes. Further breakthroughs could instigate an “AI frenzy” around BIDU, currently priced attractively at a mere 9.2 times forward earnings.
JD.com (JD)
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JD.com (NASDAQ:JD) stands as another potential “Amazon killer” from China. The impact of the above-mentioned country-specific headwinds and concerns about JD.com lagging its local competitors have battered the shares of this Chinese e-commerce titan.
Nevertheless, the company is steering towards growth, primarily through an aggressive stance on international expansion.
The valuation of JD stock, trading at a modest 8.5 times earnings, possibly overshadows the uncertainties surrounding JD.com’s global growth endeavors. Recent strides towards a turnaround are visible, with JD.com beating revenue expectations in Q4 2023.
Amid anticipations of double-digit earnings expansion in 2025 and 2026, JD.com’s recovery post-March 2024 could pave the way for sustained momentum in the coming months.
MercadoLibre (MELI)
Latin American Giants: MercadoLibre, PDD Holdings, Sea Ltd., and Tencent on the Rise
When exploring potential candidates that could rival the likes of Amazon or Google, it’s crucial to cast our gaze beyond the familiar landscape. Enter MercadoLibre (NASDAQ:MELI), often dubbed as the “Latin America’s Amazon,” a moniker that hints at its colossal presence in the region.
MercadoLibre’s Diversified Powerhouse
While MercadoLibre’s e-commerce stronghold is undeniable, its fintech dominance adds a fresh layer to its narrative. The fusion of e-commerce and fintech arms not only amplifies growth prospects but also underscores the company’s adaptability in a dynamic market. As investors eye MELI’s promising trajectory, the stock’s exceptional valuation mirrors their confidence in its enduring potential.
An interesting perspective surfaced recently in Barron’s, advocating that the post-earnings dip presents a strategic entry point for savvy investors. With Latin America’s e-commerce niche still ripe for penetration (currently at a modest 10%), MercadoLibre’s fortification in its home territories could spark a growth surge, possibly outshining Amazon’s defended U.S. perimeter. Despite MELI’s remarkable 1500% surge in the past decade, its journey seems far from over.
PDD Holdings: An Overseas Power Play
PDD Holdings (NASDAQ:PDD), previously known as Pinduoduo, stands as a pivotal player in the Chinese e-commerce realm, boasting its eponymous platform as a stronghold. However, the true ace up PDD’s sleeve lies in its burgeoning Temu e-commerce venture, shaping up to be a formidable Amazon contender – a testament to its resilience in a sluggish market.
Despite the controversies that swirl around Temu, it has not impeded PDD’s stride, with recent earnings reports reflecting its overseas triumph, particularly in the U.S. Amid a shifting geopolitical landscape, PDD’s pivot towards European, Middle Eastern, and Asian markets could ignite a fresh wave of success. At 16.7 times forward earnings, analysts perceive PDD shares as a bargain buy in the making.
Sea Ltd.: A Stock Market Phoenix
Unveiling the lesser-known Sea Ltd. (NYSE:SE), a tech conglomerate hailing from Singapore, which houses a trifecta of online gaming, e-commerce, and fintech under its expansive umbrella. Despite weathering the storm in the 2022 tech turmoil, SE stock is on an upward trajectory, spurred by an impressive earnings revelation – marking Sea’s maiden voyage into year-round profitability.
Armed with a revitalized growth engine, Sea’s resurgence hints at substantial earnings expansion, as predicted by industry analysts. Though trading at 31 times forward earnings, SE’s revival narrative paints a picture of a potential heavyweight in the making – an investment prospect that could rival the giants of the Western hemisphere.
Tencent Holdings: The Indomitable Force
The Resilience of Tencent Holdings in China’s Tech Sector
Established Competitor to America’s Big Tech Giants
Tencent Holdings (OTCMKTS:TCEHY) stands as a stalwart in China’s tech landscape, offering investors exposure to a wide array of sectors ranging from social media to telehealth.
In response to China’s economic headwinds, Tencent introduced the Hunyuan large language AI model. Despite recent fiscal setbacks, the company’s strategic alignment with the Chinese government positions it well for success in the burgeoning field of “AI nationalism.”
Driving Potential Growth in Digital-Based Businesses
Despite trading at a premium compared to competitors like BABA, TCEHY stock, priced at 13.1 times forward earnings, represents a compelling value proposition. The integration of AI technology is poised to boost operational efficiency across Tencent’s digital enterprises, further bolstering its market position.
Future Outlook and Investor Insights
Looking ahead, Tencent Holdings remains a key player in China’s tech revolution, leveraging AI advancements to drive performance and innovation. Investors are advised to monitor developments closely, as the company continues to navigate challenges and capitalize on growth opportunities in the evolving tech landscape.
