Alibaba Group’s U.S.-listed shares surged nearly 5% on Wednesday, closing at their highest level in over two years, following reports of a partnership with Apple to develop artificial intelligence features for Apple products in China.
Alibaba’s shares surge 5% on Apple partnership news
Apple submitted AI features developed in collaboration with Alibaba to Chinese regulators for approval, a process expected to take several months. Analysts suggest that this partnership could revitalize Apple’s slowing sales in China, a vital market for the tech giant. Upgrades, a key driver in device sales, have been more prevalent where AI features have launched, such as in the U.S. Apple is also likely to benefit from access to Alibaba’s extensive e-commerce data, potentially making AI offerings more personalized, according to Bloomberg.
Five-day winning streak for Alibaba shares
Wednesday marked the fifth consecutive day of gains for Alibaba’s U.S.-traded shares. Jefferies analysts previously raised their price target for the stock to $150 from $144, without incorporating the potential impact of the reported partnership with Apple into their report. Meanwhile, JPMorgan analysts indicated they do not expect Apple to confirm the partnership until the features are ready for launch, but noted that this rollout could signify “significant progress” for Apple in China and potentially boost sales of upcoming iPhone models.
Shares of Alibaba have gained over 60% in the past year, reflecting investor confidence boosted by news of the Apple collaboration. Apple’s stock also rose by 1.8% on Wednesday and has seen a gain of more than 25% over the last year.
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During a speech at the World Governments Summit in Dubai, Alibaba chairman Joe Tsai highlighted the selective nature of Apple’s choice to partner with them, stating, “Apple has been very selective. They talked to a number of companies in China, and in the end, they chose to do business with us. They want to use our AI to power their phones.” However, Tsai did not disclose further details about the timeline for the partnership or whether Alibaba would be an exclusive partner.
The partnership comes as Apple faces intensified competition in China from domestic brands like Huawei and Vivo, which have been reclaiming market share. According to CNN, Lucas Zhong, a research analyst at Canalys, noted that while AI services could help Apple attract users, the company encounters a tough competitive environment, especially with Huawei’s recent resurgence. Huawei captured a 16% market share in China last year, overtaking Apple’s 15%, but Apple regained the lead in 2023 with a 19% market share compared to Huawei’s 12%.
Alibaba’s Hong Kong-listed shares have surged over 40% since hitting a two-year low in January. The company recently introduced its latest Qwen AI model shortly after Chinese startup DeepSeek unveiled a competitive AI model.
In related news, Elon Musk announced that his company xAI will launch Grok 3, a new large language model, in one to two weeks, claiming it outperforms existing AI chatbots currently on the market.
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