Alibaba’s Hong Kong-listed shares slid about 5% on early Monday trading, leading losses on the Hang Seng China Enterprises Index, after U.S. officials raised alarms over its AI partnership with Apple (NASDAQ:AAPL).
The White House is wary that the deal could accelerate China’s AI prowess, expose Apple to stricter Chinese data rules and pose national security risks.
The setback compounds Alibaba’s mixed Q4 fiscal 2025 results. Revenue of RMB236.4 billion ($32.6 billion) fell short of the RMB237.9 billion that analysts expected, while earnings per American Depositary Share came in at $1.73, below forecasts. Investors punished the stock, driving it down more than 8% after the earnings release.
Analysts caution that regulatory scrutiny may slow Alibaba’s cloud and AI expansion. Bloomberg Intelligence’s Catherine Lim warns the U.S. pushback could curb the company’s potential cloud-revenue upside.
Apple, China’s second-largest smartphone vendor, also stands to lose if the tie-up stalls. Its sales in the region slipped 2.3% last quarter amid fierce competition from Huawei and Xiaomi. Union Bancaire Privee’s Vey-Sern Ling notes Apple needs a local AI partner to remain competitive in China’s fast-evolving market.
This article first appeared on GuruFocus.
