Alibaba's stock drops as US scrutinizes AI deal with Apple, potential negative impact for both.

From Yahoo Finance: 2025-05-21 11:53:00

Alibaba’s stock dropped 4.8% as US officials scrutinize a potential AI partnership with Apple. Alibaba’s first-quarter rally of over 40% has stalled due to disappointing results. If the deal is blocked, Apple could face repercussions in the competitive Chinese smartphone market. Analysts suggest other AI stocks may offer better returns.

Analysts warn that Alibaba’s stock may not be the best AI investment option, with limited upside potential. Apple’s attempt to boost iPhone sales in China could be hindered if the AI partnership with Alibaba is blocked. The potential deal was seen as a way to enhance iPhone’s competitiveness in the Chinese market, but now faces opposition.

Investors are advised to look beyond Alibaba for AI opportunities with higher returns. Apple’s iPhone sales in China have been declining due to competition from local brands like Xiaomi and Huawei. The proposed partnership with Alibaba’s AI features could have been a game-changer for Apple in the Chinese market, but regulatory scrutiny has put the deal in jeopardy.

Read more: Alibaba Shares Slide as AI Deal with Apple Faces US Scrutiny