Author | Liu Baodan
Editor | Zhang Xiaoling
Two days ago, Jack Ma, who had not been seen for a long time, appeared at the Alibaba campus, looking relaxed and at ease. Two days later, a significant news broke that Apple and Alibaba had teamed up, with Apple's AI phone ultimately choosing Alibaba's Tongyi Qianwen.
On February 11, Wall Street News learned that Apple has selected Alibaba as a partner to develop artificial intelligence features for the Chinese version of the iPhone.
This is a highly indicative signal; Apple has very strict requirements for its suppliers. The core reason for choosing Alibaba among many AI models in China is its model and application deployment capabilities. Through this collaboration, Alibaba will also occupy a certain position in the smartphone market.
On February 12, the capital market was once again ignited by this news, with Alibaba's Hong Kong stock ultimately rising by 8.48% that day, bringing its market value above HKD 2.2 trillion. Since the beginning of this year, Alibaba's Hong Kong stock has accumulated a rise of over 38%.
For the past decade, external attention on Alibaba has focused on its e-commerce business. This collaboration allows the market to see the value of Alibaba's AI.
In fact, Alibaba's capabilities in AI have always been underestimated. Two years ago, when Pinduoduo's market value surpassed Alibaba's, Jack Ma made a surprise appearance on the internal network to encourage everyone and mentioned Alibaba's AI; three months ago, during Ant Group's 20th anniversary, Jack Ma also appeared to discuss the opportunities brought by AI, attracting attention.
When Apple extended an olive branch to Alibaba, it brought about a profound shift in Alibaba's valuation logic: from an e-commerce giant to a core player in AI infrastructure. Coupled with the explosive popularity of DeepSeek since the beginning of the year, Chinese AI assets are also undergoing a revaluation. As a comprehensive tech giant fully invested in AI, the capital market is redefining Alibaba's &#34;imagination&#34; with real money.
<h2>Turning Point</h2>
2025 is seen as the inaugural year for the commercial application of large AI models. Alibaba has kicked off the year with a blockbuster collaboration, becoming Apple's partner in China to develop AI features.
Apple's AI will deeply integrate multiple functions of Alibaba's Tongyi large model to reconstruct capabilities such as photo search and text rewriting, enhancing the experience in photography and text processing scenarios.
Additionally, users can also invoke the large model through the voice assistant Siri to complete their commands. Over the past year, smartphone manufacturers including Samsung and Xiaomi have launched smartphones with AI capabilities to optimize user experience. However, Apple's AI features have not been launched in China, affecting the performance of Apple phones in the Chinese market.
In the first quarter of 2025, Apple's sales in China fell by 11.1% year-on-year, with revenue dropping to USD 18.51 billion. Apple CEO Tim Cook attributed part of the decline in market share to the lack of AI features being launched in China.
Wall Street News learned that Apple began looking for AI partners in China starting in 2023, and recently tested the DeepSeek model. At the end of last year, Apple was also in talks with Baidu, Tencent, ByteDance, and other manufacturers. It now appears that Apple ultimately chose Alibaba's AI.
Alibaba's data and model capabilities were the key factors that allowed it to stand out
According to informed sources, Alibaba, as an e-commerce giant, possesses more consumer data, and its AI can better understand the requests of Chinese users based on personal data, which ultimately led Apple to choose it.
As one of the earliest technology companies to layout large models, Alibaba released its first large language model, Tongyi Qianwen, in April 2023 and has continued to open-source it. On January 29, Alibaba's large-scale MoE model Qwen2.5-Max officially went live, demonstrating performance comparable to or even surpassing that of DeepSeek V3 and GPT-4 in multiple authoritative benchmark tests.
The Tongyi Qianwen Qwen large model has become the largest open-source model family globally. Recently, top AI researchers, including Fei-Fei Li, built models such as s1-32B, which perform on par with OpenAI's O1 and DeepSeek's R1, based on Alibaba's open-source model, at a cost of less than $50.
Apple also values Alibaba's data capabilities. Apple's goal is to find a partner that can understand the requests of Chinese users based on personal data, and Alibaba, as an e-commerce giant, has a vast amount of user shopping and payment data, which is a competitive advantage that other model providers like Baidu cannot match.
In addition to large model capabilities, Alibaba also has significant advantages in deployment, computing power, and other AI infrastructure aspects.
It is understood that Apple ultimately abandoned Deepseek's model mainly because the Deepseek team lacked the necessary manpower and experience to support large clients like Apple. Visibly, Deepseek, which is in a period of explosive growth, has somewhat limited computing power and often displays &#34;server busy&#34; prompts.
Moreover, Qwen2.5Max has outperformed international competitors like Claude-3.5-Sonnet in global rankings in mathematics and programming, and it has shown advantages in &#34;engineering capabilities,&#34; which Apple values most—balancing model performance with deployment costs is crucial for the commercialization of consumer electronics giants like Apple.
Collaborating with Apple could not only bring direct model licensing revenue but also enhance Alibaba Cloud's penetration in the developer ecosystem, continuously increasing its value; for Apple, whether it can reverse the decline in domestic sales is also an important breakthrough point for Alibaba AI. According to Canalys data, Apple's shipment volume in China in 2024 is expected to be 42.9 million units, a year-on-year decline of 17%, ranking third in the industry.
AI large models have gradually shifted from a competition of models to an application battlefield. With a deep partnership with Apple, Alibaba will also refresh its AI mindset, transforming from a former e-commerce giant into a true technology enterprise.
<h2>Future</h2>
From an e-commerce giant to a core player in AI infrastructure, the capital market is redefining Alibaba's imagination with real money.
The core of Alibaba's valuation reconstruction lies in its AI technology standing on the &#34;party A&#34; position for the first time in cooperation with global top technology giants. Apple's choice of Alibaba's Tongyi Qianwen Qwen series models over alternatives like Baidu and DeepSeek is essentially a hard-core certification of Alibaba's technological strength
This technology premium is directly reflected in the capital market: CITIC Securities has raised Alibaba's target stock price to $135/ADR, with the logic being the qualitative change of AI capabilities from a &#34;cost center&#34; to a &#34;profit engine.&#34;
The deeper valuation logic lies in the &#34;leverage effect&#34; of Alibaba's AI technology on its core business. In the past, the market's valuation of Alibaba was long anchored to e-commerce GMV and cloud service revenue, but this cooperation reveals a new narrative—AI technology is becoming a super connector that bridges the C-end and B-end.
As we can see, entering 2025, the market's attitude towards Alibaba has undergone a significant shift. In mid-January, it hit a recent low, but since January 14, its stock price has begun to gradually rise, with a cumulative increase of over 45% within a month.
As one of the tech giants going All In on AI, Alibaba has taken more than two years to have capital truly reassess its AI value.
In September 2023, Joseph Tsai and Eddie Wu respectively took on the roles of Chairman of the Board and CEO of Alibaba Group. After completing the second institutional handover of management duties, Alibaba began to make bold moves in AI.
Alibaba's layout in AI mainly has three levels: first, Alibaba Cloud provides computing power services and has a large general-purpose Qianwen, which can offer large model services. Second, as the largest e-commerce platform in China, Alibaba views AI as a key driving force to enhance its competitive capabilities, applying it in its own ecological scenarios. Finally, Alibaba has also made extensive investments in AI startups, including Moonlight Dark Side.
As the main battlefield, Alibaba Cloud's layout in AI covers the entire lifecycle of training, inference, deployment, and application. Over the past year, Alibaba Cloud has centered around AI, comprehensively reconstructing underlying hardware, computing, storage, etc., and integrating with AI scenarios to accelerate model development and application.
In September last year, Alibaba Cloud CTO Zhou Jingren stated at the Cloud Habitat Conference, &#34;To meet the exponential growth demand for GPU computing power, especially the impending explosion of the inference market, Alibaba Cloud is ready.&#34;
DeepSeek has undoubtedly accelerated the popularization of AI applications. Goldman Sachs believes that the surge of DeepSeek is fundamentally due to the significant improvement in inference efficiency, and Chinese companies have the potential for further global expansion, with internet giants' cloud businesses benefiting from the sustained public cloud and AI computing demand driven by years of increasing AI application rates.
Based on the comprehensive layout of AI infrastructure and models, combined with the benefits brought by DeepSeek, cloud service providers will become the focus of capital attention in 2025. Based on this, Alibaba's AI will also enter a revaluation phase.
Lü Wei, Chief Analyst of the Computer Industry at Minsheng Securities, pointed out that the leveling effect brought by DeepSeek reduces the gap with overseas models, and efficient training methods significantly lower the computing power threshold. The decrease in the computing power threshold provides cloud vendors with opportunities to deploy &#34;killer&#34; applications at a low threshold, which will continue to expand.
Recently, JP Morgan interviewed over 100 Alibaba investors and found that market sentiment towards Alibaba is increasingly optimistic. The institution stated that many hedge funds and long-only fund investors view artificial intelligence as a potential turning point for Alibaba, with some expressing interest in understanding the valuation of Alibaba's cloud business and the upside potential from large language models
JP Morgan stated that to encourage negative investors to shift to a positive stance, Alibaba may need to provide a clear AI monetization strategy in the future, along with exceeding expectations in cloud business profitability and achieving a more attractive valuation.
Alibaba is one of the most optimistic tech giants regarding AI. Eddie Wu said last year that the greatest imagination of generative AI is not about creating one or two new super apps on a mobile screen, but about taking over the digital world and changing the physical world.
Now, it is time for Alibaba to validate its judgment, and this will be an unprecedented global battle

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- Alibaba has partnered with Apple to develop AI features for the Chinese version of the iPhone, marking a significant shift in the tech landscape.  
- This collaboration highlights Alibaba's underestimated AI capabilities and positions it as a key player in the AI infrastructure market, with its stock rising 38% this year.  
- The partnership is expected to enhance Apple's performance in China, where its sales have declined, while redefining Alibaba's valuation and role in the tech industry.

Apple enters the market, re-evaluating Alibaba