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Alibaba (BABA) may have just received one of the strongest endorsements any artificial intelligence company could hope for. After nearly two years of regulatory delays, Apple (AAPL) has reportedly secured approval to launch Apple Intelligence in China, and Alibaba's Qwen large language model will power much of the AI experience.
For investors, this is more than another technology partnership. It positions 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 tries to convince investors that it deserves to be valued as an AI leader rather than simply an e-commerce company.
Alibaba Is Becoming More Than an E-Commerce Giant
Alibaba remains China's dominant e-commerce and cloud computing company, operating Taobao, Tmall, Alibaba Cloud, Cainiao logistics, and several digital services. But management's biggest priority today is artificial intelligence.
The reported Apple partnership could become another milestone in that strategy. Under the arrangement, Alibaba's Qwen AI model is expected to power many Apple Intelligence features in China, including text generation, image understanding, and conversational AI, while Baidu (BIDU) supports other functions such as Siri-related services.
For Alibaba, the deal validates years of investment in AI infrastructure and may create new opportunities to monetize its models across millions of Apple devices.
Alibaba's ADRs have struggled for much of 2026 despite improving AI sentiment. BABA stock is still down roughly 21% year-to-date (YTD), although it has recovered from its 52-week low near $92 to trade around $115.
Following reports of the Apple partnership, Alibaba's Hong Kong-listed shares climbed about 5% on renewed optimism around its AI business.
Cloud and AI Continue Driving Alibaba's Business
Alibaba's Q4 quarterly results showed an improving AI business even though overall results were mixed.
Revenue increased 3% year-over-year (YoY) to 243.38 billion yuan, while comparable revenue excluding divested businesses grew 11%. The company missed analyst expectations on adjusted EPS, despite reporting net income of 23.5 billion yuan, up 96% from a year earlier.
The biggest highlight remained Alibaba Cloud. Cloud Intelligence revenue climbed 38%, with external commercial cloud revenue accelerating 40%, its strongest pace in several quarters. AI-related products now generate approximately 30% of external cloud revenue, highlighting growing enterprise demand.
Management expects AI products to contribute more than half of cloud revenue within roughly one year as commercialization expands.
Alibaba Is Investing Aggressively Beyond Apple
The Apple partnership is only one piece of Alibaba's broader AI strategy.
The company recently reached a $600 million settlement with the U.S. Department of Justice, removing a long-standing legal overhang. Alibaba has also pushed its self-developed AI chips into mass production, expanded video-generation and world-model capabilities, and increased spending on AI infrastructure despite pressure on near-term free cash flow.
Those investments are weighing on profitability today but could strengthen Alibaba's competitive position as enterprise AI adoption expands.
Wall Street Still Sees Meaningful Upside in BABA Stock
Analysts generally remain constructive despite concerns over higher AI spending.
Morgan Stanley, UBS, Bank of America, and Jefferies all maintain bullish views, pointing to accelerating cloud growth and AI monetization, although several firms have trimmed price targets due to heavier investment. HSBC and Daiwa remain somewhat more cautious because near-term margins may stay under pressure.
According to Barchart data, BABA stock carries a consensus “Strong Buy” rating from Wall Street, with an average price target near $182, implying roughly 58% upside from current levels.
All told, Alibaba's reported AI deal could be a significant milestone for investors as they are willing to take on beyond-essential risks. While Alibaba's e-commerce enterprise is relatively mature, the company's intellectual property platform, cloud business, and growing ecosystem may lead to growing returns on investments for shareholders in the long term.
