Alibaba Group, the Chinese e-commerce company, is feeling the love of four hedge funds that acquired fresh stakes in the company during the second quarter.

The four funds—Appaloosa Management, Third Point, Duquesne Capital and Tiger Management—all seem to be betting shares can march higher even with the stock up 75% since the start of 2017. For the three months ended in June, shares of Alibaba are up nearly 30%. (See also: These Techs Have Left FAANG Stocks in the Dust.)

In Securities and Exchange Commission filings late last week and early this week, Appaloosa revealed it acquired 3.7 million shares of the company while Third Point disclosed a purchase of 4.5 million shares. Meanwhile, Duquesne Capital said it acquired 710,000 shares while Tiger Management bought 214,000 shares, reported CNBC. The stake purchases come ahead of Alibaba’s fiscal first-quarter earnings report, which is slated to be announced before the open of trading Thursday.

Beating the Views?

With the company already guiding for strong growth during the next quarter, Wall Street is looking for revenue of $7.02 billion, up more than 50% year-over-year and non-GAAP earnings per share of $0.92 a share, more than 30% higher than the year-ago fiscal first quarter. All of its major business units including e-commerce, cloud computing and digital media and entertainment are expected to see double-digit growth during its fiscal first quarter. Some on Wall Street are predicting Alibaba will be able to beat analysts views, thus sending the stock higher. (See more: Alibaba Forecasts Revenue Growth Of 45%-49% Topping Street Estimates.)

Despite the euphoric rise in shares of China’s leading e-commerce player, investors, including the four funds, can’t seem to get enough of the stock and other Chinese technology players. At a time when profit taking would seem to make sense, they continue to buy more shares. But while the stock is gaining and investor interest is climbing, some are warning of an impending pullback, particularly if Alibaba’s earnings fail to impress.

Take Northern Trust Capital Markets, which recently raised concerns that it along with rival Tencent (TCEHY) are engaged in risky, capital-intensive bets that need to pay off to sustain the lofty stock prices. Stock in Tencent, which operates the popular WeChat messaging platform, is up more than 70% so far this year. Both have been pouring billions of dollars into new markets and businesses as a way to lower their reliance on e-commerce in China, which is starting to mature. “The digital scale platform titans, such as Tencent, Alibaba and Facebook deserve premium ratings, but they will need to ‘grow’ into such ratings rather than skyrocket higher,” wrote Neil Campling, head of global TMT research at Northern Trust, in a report to clients that was covered by MarketWatch. “For those stocks where there is a significant gap between the two metrics we wonder if we may see some pressure on stock prices in the short term.”

By Donna Fuscaldo
Investopedia

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