Alibaba Shares Surge as Apple Partners for AI Features in China

HONG KONG, China — Shares of Alibaba Group saw a significant increase on Wednesday, fueled by reports that the Chinese tech giant is collaborating with Apple to develop artificial intelligence features for Apple products in China.

The Information reported on Tuesday, with The Wall Street Journal following up early Wednesday, that Apple has submitted AI features developed with Alibaba to Chinese regulators for approval. This process could take several months, casting a shadow of uncertainty over the anticipated partnership.

Neither Apple nor Alibaba responded to requests for comment regarding the reported collaboration. Analysts suggest that the partnership could enhance Apple’s presence in the Chinese market, where upgrades to devices are a crucial driver of sales. According to Bloomberg, the deal may enable Apple to leverage Alibaba’s extensive data collection to improve AI product personalization.

Wednesday marked the fifth consecutive day of gains for Alibaba’s U.S.-listed shares. Jefferies analysts raised their price target on Alibaba to $150 from $144, although they did not factor the potential Apple partnership into their research report.

JPMorgan analysts expressed cautious optimism about the collaboration, noting that they do not expect confirmation until the AI features are ready for launch. They added that this rollout could signify “significant progress” for Apple in China, bolstering sales of both the iPhone 16 and the anticipated iPhone 17, which is expected to be announced later this year.

Alibaba’s shares rose nearly 5% on Wednesday, closing at their highest level in over two years. The stock has surged more than 60% over the past year. Meanwhile, Apple shares increased by 1.8% on Wednesday and have gained over 25% in the last 12 months.

In a broader context, Alibaba’s recent share performance contrasts sharply with its historically tumultuous years in the public eye. The company, once deemed a forerunner in the Chinese tech landscape, has struggled following extensive scrutiny from Chinese regulatory bodies.

Bloomberg reported that the potential collaboration is a bright spot for Alibaba, particularly as the Hang Seng Composite index closed 2.6% higher on Wednesday, riding the momentum created by the expected AI feature rollout. Analysts forecast that this could lead to a resurgence in not just Alibaba’s stock but in the tech industry at large in Hong Kong.

Market analysts emphasize that while the news of the partnership has sparked investor interest, underlying challenges remain in the Chinese economy. Dilin Wu, a research strategist at brokerage Pepperstone, remarked on the broader economic headwinds facing China, noting “deflationary pressure, weak consumer sentiment, and the ongoing real estate slump” as ongoing challenges.

As the market anticipates the outcome of the collaboration, the Chinese Communist Party’s National People’s Congress on March 5 remains a pivotal moment for potential economic announcements that could further influence market dynamics.