The entire market has turned sour on Chinese stocks despite what promise of upside they may have brought over the past two quarters. Asia’s powerhouse beat the S&P 500 index in terms of price action until talks of trade tariffs being rolled out by President Trump started to create fear and uncertainty for the future of China’s economy as its uneven stance with trade with the United States was placed in the spotlight.

Today, however, that story may be about to change, as President Trump has decided to exempt some items from these Chinese trade tariffs, which are mainly focused on consumer electronics and semiconductors. However, most investors in the market likely also missed the details of the headline, as the new shift has included parcels coming out of China valued at $800 or less, which makes a much better (and certain) environment for a couple of retail stocks to shine back.

Clearing a path for their former glory, this shipping and commerce exemption on small parcels is directly set to benefit those who had doubts about buying into the momentum displayed by shares of Alibaba Group (NYSE: BABA) and PDD Holdings Inc. (NASDAQ: PDD). These companies also happen to be China’s largest players in the E-commerce space both domestically and internationally, which is why they have both become potential buy targets today.

Why Alibaba Is Still a Buy in 2025—Even After a 77% Drop

In 2024, Alibaba was all the hype around China bulls, with fund managers influencing the market by buying and predicating on the stock throughout the year. Investors might remember Michael Burry and David Tepper once announcing that Alibaba made up the largest position in their funds, an unconventional play considering the geopolitical tensions.

Now more than ever, it takes guts and conviction to stick with Alibaba (and all Chinese stocks, for that matter). This is especially true considering that China has become the main target of these trade tariffs and consequently has the largest trade imbalance with the United States.

For this reason, fear has grabbed onto Alibaba stock and dragged it down to only 77% of its 52-week high. However bearish this may seem in the short term, investors can zoom out and recall that Alibaba still claims to have outperformed the S&P 500 index over the past quarter.

Because this Chinese giant delivered a net performance of up to 39.1% during the period, it still carries enough momentum to justify higher ceilings ahead, especially considering how far it is from the all-time high price of just over $310 per share set a few years ago.

Now that the setup clearly presents an asymmetric opportunity for profit, investors can lean on the recent rating made by Citigroup analysts as of April 2025. Even with tariffs recently rolled out, these analysts see Alibaba as a Buy, along with a $169 per share valuation that calls for as much as 48.1% upside from today’s low price.

This view is amplified by the fact that Alibaba isn’t just an E-commerce play. The company also has a cloud computing and data center arm spread out across most of Asia’s fastest-growing economies, giving investors a wide-open strategy to mitigate the effects of tariffs moving forward.

PDD Holdings: Trading at a Discount, Poised for a Major Rebound

Because PDD Holdings owns Temu, this exemption on $800 or less parcels will benefit the company in ways some investors have not realized. This platform specializes in everyday products that other brands or companies may sell, but it makes a margin by cutting out most middlemen.

This business model allows PDD and Temu to keep prices low and take market share from competitors, which is why their market capitalization has grown to over $125 billion, nearly matching Alibaba’s. Trading at 58% of its 52-week high, the stock’s price is far from the underlying value proposition it brings to broader markets today.

That divergence may have driven Wall Street analysts to confidently maintain an optimistic outlook on PDD despite its recently bearish price action, something that would typically discourage analysts from taking a bullish stance on any stock in the market.

That being said, investors can look to the $169.9 consensus price target set by these analysts, which now calls for as much as 79.3% upside from today’s low price and gives investors a chance at unmatched upside after the dust settles. The market realizes that these exemptions could clear the path for PDD to move higher.

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