Happy Tuesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟥 | US stocks fell again today, the S&P 500’s fourth decline in a row, on disappointing consumer confidence data and rising fear of a coming correction.

• 📈 | One Notable Gainer: Eli Lilly (LLY) won the weight loss drug news cycle today. Its shares added 2.4% on news it will sell higher doses of Zepbound at lower prices.

• 📉 | One Notable Decliner: On the flip side, Hims & Hers (HIMS) fell more than 22% after it missed on gross margins and said it could pull some weight loss drugs from its platform.

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MARKET MOVERS

Krispy Kreme, Home Depot, Zoom

DNUT (-21.9%) Krispy Kreme’s stock heads for a new low as company warns of weaker revenue (MarketWatch)

HD (+2.8%) Home Depot earnings beat Wall Street estimates, as retailer breaks comparable sales losing streak (CNBC)

ZM (-8.5%) Zoom Muddles Along, Moves the Goalposts (The Motley Fool)

SOLV (+9.5%) Thermo Fisher buys Solventum's purification and filtration business for $4.1 billion (Reuters)

SRE (-19%) Sempra Stock Is Today’s Worst in S&P 500 After Earnings. Here’s Why. (Barron’s)

OVERHEARD ON THE STREET

Reuters: US consumer confidence plummeted to an eight-month low in February, per the Conference Board, as anxiety about President Trump's policies grew.

AP: Apple shareholders rejected a proposal urging the company to follow other firms in abandoning its diversity programs amid political pressure.

CNBC: Bitcoin dropped to a three-month low below $90,000 amid sell pressure in equities.

Bloomberg: Leveraged ETFs have dropped 40% in three days following disappointing economic reports and significant losses in crypto bets.

CNN: The FAA contracted SpaceX’s Starlink to upgrade its airspace management systems, raising conflict of interest concerns for CEO Elon Musk.

TOMORROW’S TRADE IDEA, TODAY

Alibaba? More Like AI-baba

New Sheriff in Town

NVIDIA’s (NVDA) earnings are due tomorrow, and the Street is on edge. The chipmaker rode the AI wave to become one of the world’s most valuable companies. Now investors are worried that any shred of disappointment could bring down the whole sector.

But a growing number of market observers are shedding light on a silver lining. It might not matter if NVIDIA escapes this week unscathed. There’s a new leader in the AI space, they say.

Money Well Spent

Chinese tech giant Alibaba (BABA) is beefing up its capital expenditures, with much of it going toward AI. 

Late last month, the company revealed Qwen AI, an LLM it claimed surpasses market disruptor DeepSeek. It also recently inked a new deal to provide technology for iPhones sold in China.

That has left several high-profile market observers very bullish on $BABA. Billionaire investor and GameStop (GME) CEO Ryan Cohen made a big splash when he increased his personal Alibaba holdings to around $1 billion.

Morgan Stanley (MS) analyst Gary Yu also lifted his price target to Overweight with a $180 price target, or around 34% upside. Alibaba’s recent earnings report outlined a triple-digit increase in its AI-related product revenue, which Yu says is a sign that its money is well-spent.

$BABA Is Bull

Markets are beginning to catch onto Alibaba’s potential. Its stock has already surged nearly 60% YTD. But Scott Nations of Nations Indexes believes that, despite the stock’s massive gains this year, its ability to utilize AI in a “very strong existing business” is likely to drive further gains. 

Meanwhile, Morgan Stanley’s generous upgrade is actually on the conservative side. Jefferies set its price target at $156, and UBS recently announced it had replaced Alibaba’s competitor PDD Holdings (PDD) with $BABA in its model portfolio. At least four other major investment firms have given the stock a Buy rating, as well. 

The company’s AI business has been fruitful thus far, and it is expected to continue dumping money into it. If it keeps trending in the same direction, Alibaba might just have to change the second letter in its name from “L” to “I”.

Sponsored by MarketBeat

Discover the next Magnificent 7 Stocks--FREE

Where can you find the next big winners? We have identified what we believe will be the Next Magnificent 7. They have all the same qualities of the original “mag 7”, like global market share, strong cash flows, and most importantly… a great value-proposition for investors. In short, they could give you the chance to buy the next Apple, Amazon, or Tesla… while they are still under the radar of most investors.

Break free from the investing herd and With The New Mag 7 stocks. 

ON OUR RADAR

AP: President Trump announced that tariffs on Canada and Mexico will “go forward” next month, potentially impacting economic growth and inflation.

CNBC: Three federal judges dealt setbacks to the Trump administration in separate cases involving federal spending, refugees, and foreign aid.

BI: In the age of AI, experienced software engineers are thriving while entry-level coders face uncertainty as the career ladder collapses.

MONDAY’S POLL RESULTS

Are you bullish or bearish on Unity Software (U) over the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨🟨⬜⬜ 🐻 Bearish

And, in response, you said:

• 🐂 Bullish — “Been beaten down over the years, time to recoup some of the downside.”