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Alibaba's (BABA) AI Program to Aid Its Growth in Agriculture

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Alibaba Group Holding Limited’s (BABA - Free Report) cloud computing arm has unveiled ET Agricultural Brain, a program based on the power of artificial intelligence (“AI”) to improve the agricultural productivity of China. Notably, this move is in sync with the company’s focus on reinforcing its presence in the cloud market.

The program will aid the companies involved in the farming of fruits, vegetables and livestock, especially pigs by providing efficient and technically advanced ways of farm management.

ET Agricultural Brain is the extension of the company’s ET Brain mission which aims at countering the challenges of environmental protection, city planning, health care and industrial manufacturing by leveraging AI capabilities.

With this innovative program, Alibaba forays into the growing agricultural market of China. This is likely to improve the company’s client base which will aid top-line growth.

Coming to the price performance, shares of Alibaba have returned 45.2% over a year, outperforming the industry’s rally of 44.3%.



Program Gaining Traction

Alibaba Cloud is likely to sustain momentum with the support of its AI technology in the traditional industries like agriculture, manufacturing, to name a few. Moreover, it is the largest public cloud provider in China.

China's cloud computing market is expected to grow at 30% year over year between 2017 and 2022.

ET Agricultural Brain processes data given by the enterprise clients via the installed meters around the farm area to offer monitoring in real time with the help of visual and voice recognition technologies.

Further, the program is able to record the production details of a crop digitally, which will help raise the quality and quantity of crop yields. Consequently, the program reinforces the company’s capabilities to meet the challenges of agricultural industry.

The program has been already adopted by big farming and agricultural companies like– Tequ Group, Haisheng Group and Guoqiang Modern Farming. The unique abilities of the program are expected to attract more companies to the platform.

Agriculture Holds Promise

Agriculture remains a significant sector globally and its integration with technology has created growing demand for modern techniques.

Per the data from Markets and Markets, the smart agriculture market is expected to reach $11.23 billion by 2022 by growing at a CAGR of 13.27% between 2017 and 2022.

Alibaba which holds a dominant position in the China’s e-commerce market, is well poised to reap benefits from growing Chinese agricultural and animal husbandry sector by combining farming with cloud technologies.

Reportedly, China’s pork production accounts for more than half of the world supply. With such potential for growth, other companies are also trying to establish presence in the sector.

JD.com (JD - Free Report) has proposed a project through which it intends to help the poor people to earn their livelihood by raising chickens. NetEase, which is trying to build its e-commerce platform, has developed 2.2 million-square-meter farm to raise pigs.

We note that Alibaba gains a competitive edge against its peers by introducing ET Agricultural Brain.

Zacks Rank & Stocks to Consider

Currently, Alibaba carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the retail-wholesale sector are Amazon (AMZN - Free Report) and Groupon (GRPN - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Amazon and Groupon is pegged at 30.2% and 6.5%, respectively.

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