Don't bet against Alibaba, says tech exec

Don't bet against Alibaba: Chegg CEO
Don't bet against Alibaba: Chegg CEO

Nearly 10 years ago, Yahoo made a big bet that really got Silicon Valley talking.

It paid a whopping $1 billion for 40 percent of a little-known Chinese e-commerce company. As it turned out, that Hangzhou, China-based Internet retailer was later behind the biggest initial public offering ever. Of course, the company Yahoo was smart enough to take a stake in was, the primary company of Alibaba Group.

The Alibaba Group logo is shown at the New York Stock Exchange during the company’s IPO, Sept. 19, 2014, in New York.
Adam Jeffery | CNBC

Daniel Rosensweig, who as former chief operating officer of Yahoo facilitated the Alibaba deal, told CNBC on Wednesday that over the years he's learned not to bet against Alibaba Group.

"My experience is every time you bet against Alibaba you're wrong because you're betting on e-commerce, which is, you know, moving tremendously in the right direction. You're betting on mobile, which is moving tremendously in the right direction," Rosensweig, CEO of Chegg, said on "Squawk on the Street."

"It's inevitable the Chinese market grows. It's inevitable e-commerce grows. It's inevitable mobile grows. And so why wouldn't they be the continued winner in that space? Who's going to take them on? And then you look at the global expansion and so I've been impressed since Day One when we did the deal."

Looking forward, Rosensweig suspects Alibaba's global expansion plans will eventually target the United States. Today, though, he thinks it will simply continue to invest in emerging e-commerce companies with strong growth prospects.

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Rosensweig downplayed concerns Alibaba is spending too much. Given its profit margins and growth rates, these worries are only temporary, he noted. Its overall growth rate and market opportunity are fine, Rosensweig said.