Alibaba stock gained Apple’s biggest AI support. This could be a game changer for BABA.

Alibaba (BABA) may have just secured one of the strongest endorsements an artificial intelligence company could hope for. After nearly two years of regulatory delays, Apple (AAPL) has reportedly won approval to launch Apple Intelligence in China, where Alibaba’s Qwen large-scale language model will power many of its AI experiences.

For investors, this is more than just a technology partnership. This puts Alibaba at the center of Apple’s AI rollout in one of the world’s largest smartphone markets, while reinforcing the company’s growing reputation in generative AI. The timing also comes as Alibaba is trying to convince investors that it deserves to be recognized as an AI leader, not just an e-commerce company.

Alibaba is becoming more than just an e-commerce giant

Alibaba remains China’s leading e-commerce and cloud computing company, operating Taobao, Tmall, Alibaba Cloud, Zaiha Logistics, and several digital services. However, the biggest priority for today’s executives is artificial intelligence.

The reported partnership with Apple could be another milestone in that strategy. Under the agreement, Alibaba’s Qwen AI model is expected to power a number of Apple Intelligence features in China, including text generation, image understanding, and conversational AI, while Baidu (BIDU) supports other features such as Siri-related services.

For Alibaba, the deal demonstrates years of investment in AI infrastructure and could create new opportunities to monetize its model across millions of Apple devices.

Alibaba’s ADR has struggled for most of 2026, despite improved sentiment towards AI. BABA stock is still down about 21% year-to-date (year-to-date), but has recovered from its 52-week low of around $92 and is now trading around $115.

Alibaba’s Hong Kong-listed shares rose about 5% on renewed optimism about its AI business following reports of a partnership with Apple.

Cloud and AI continue to drive Alibaba’s business

Alibaba’s fourth-quarter financial results showed improvement in its AI business, although overall results were mixed.

Sales increased by 3% year-on-year to RMB 243.38 billion, with comparable sales excluding divested businesses increasing by 11%. Adjusted EPS fell short of analysts’ expectations, even though the company reported net profit of 23.5 billion yuan, up 96% year-on-year.

The biggest highlight was definitely Alibaba Cloud. Cloud Intelligence revenue increased 38% and external commercial cloud revenue accelerated 40%, the fastest pace in recent quarters. AI-related products currently generate approximately 30% of external cloud revenue, highlighting growing enterprise demand.

Management expects AI products to contribute more than half of cloud revenue within about a year as commercialization expands.

Alibaba is actively investing in other companies besides Apple.

The partnership with Apple is just one part of Alibaba’s broader AI strategy.

The company recently reached a $600 million settlement with the U.S. Department of Justice, eliminating years of legal excesses. Alibaba is also pushing ahead with mass production of its homegrown AI chips, expanding its video generation and world model capabilities, and increasing spending on AI infrastructure, despite near-term free cash flow pressures.

These investments are currently weighing on profitability, but could strengthen Alibaba’s competitiveness as enterprise AI adoption expands.

Wall Street still sees meaningful upside in BABA stock

Despite concerns about rising AI spending, analysts generally maintain a constructive outlook.

Morgan Stanley, UBS, Bank of America and Jefferies all remain bullish, pointing to accelerating cloud growth and AI monetization, but several have lowered their price targets due to increased investment. HSBC and Daiwa remain somewhat cautious as short-term margins may remain under pressure.

According to bar graph BABA stock receives a consensus Strong Buy rating from Wall Street, with an average price target of around $182, suggesting an upside of about 58% from current levels, according to the data.

Overall, Alibaba’s reported AI deal could be a significant milestone for investors willing to take on more risk than required. Although Alibaba’s e-commerce business is relatively mature, the growth of its intellectual property platform, cloud business, and ecosystem could lead to better returns on investment for shareholders in the long term.

On the date of publication, Nauman Kahn did not have (directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.