Alibaba Stock Surge 8% After Reports of an Apple-Alibaba AI Partnership
News of a possible AI partnership between Apple and Alibaba have caused the e-commerce giant’s stocks to soar in the Hong Kong stock exchange, The Wall Street Journal has reported. Alibaba’s stock surge comes after shares of the big tech had been on a long slump after Beijing mounted a regulatory crackdown on the company.
Alibaba AI Advancements
Alibaba has joined the hype in China’s AI industry. On January 29, the tech company unveiled its Qwen 2.5, an AI model that it says surpasses the now popular DeepSeek-V3 model. When it was released, Qwen 2.5’s performance surpassed Meta’s LLama 3.1 which is significantly bigger.
Its developers claim that based on their tests, Qwen 2.5’s performance matches that of closed-source models developed by OpenAi and Anthropic. The two companies are backed by Microsoft and Amazon.com respectively.
Chinese AI presents a serious threat to the capital-intensive industry that has been dominated by Western big techs. The US has moved to protect what it calls American AI chips and technologies by limiting access by China and introducing high tariffs on Chinese-manufactured products. However experts warn that these actions could push Chinese tech firms to speed up their expansion across Southeast Asia as they seek to circumvent rising trade barriers.
“US measures have also forced Chinese firms to innovate, and that may have masked some US sectors’ inability to compete without government support,” Lombard Odier analysts wrote in a note last week. China continues to struggle with a prolonged economic slump.
“Deflationary pressure, weak consumer sentiment, and the ongoing real estate slump remain headwinds. A short-term rally driven by policy headlines won’t be enough – sustained gains will require real economic support,” Pepperstone Research Strategist Dilin Wu said.
The Apple-Alibaba Partnership
Alibaba is working with Apple to introduce AI features in iPhones. Apple’s iPhone sales in China dropped by 47.4% in November 2024 compared to the same period the previous year. The US big tech has been struggling to maintain its market share in the Asian country after Huawei aggressively launched a range of high-end smartphones in the Chinese market. Huawei’s new products are increasingly becoming popular among Chinese buyers.
Apple was counting on its iPhone 16 series to regain its momentum in the Chinese smartphone market. The iPhone 16 maker launched Apple AI in September 2024 with the promise that it will provide users with a range of AI features through Apple Intelligence.
The US big tech has not been able to make Apple AI available to Chinese users yet due to complex AI regulations in the country. In the meantime, its rivals have been marketing their AI features. Apple had been talking to Tencent and Bytedance about integrating AI models in iPhones sold in China.
Chinese Tech Stocks Outlook
The current surge in Chinese tech stocks is a stack contrast of the shaky market witnessed late last year. In the first weeks of 2025, trading activities started reversing stock performance after Beijing introduced stimulus measures to boost the economy. Analysts from Lombard Odier say that the outlook of Chinese stocks may be improving.
“The revival of the Chinese tech sector in recent years, from telecom giant Huawei to DeepSeek and other contenders, suggests that US tariffs and export restrictions may only buy time in the two nations’ strategic competition,” the analysts wrote.
Analysts remain positive on the potential of Chinese tech stocks despite economic pressures and the move by the US to introduce new tariffs on imports from China. Alibaba has survived several difficult years in the stock market. However, the Chinese e-commerce and tech giant may be headed for a turnaround after its stocks soared 8% in Hong Kong.
Alibaba shares growth has hit the 28% market this year in Hong Kong and 33% in the New York Exchange. The rise in Alibaba stock prices had a positive impact on the Hang Seng Index price, causing it to close 2.6% higher on February 12. The index has gained 9% since the beginning of this year.
