Apple Stock Rallies On Report Of Alibaba Partnership To Roll Out AI Features In China: Retail Sentiment Lags
Apple rolled out its AI features, which it calls Apple Intelligence, in the U.S. in December, and these features are expected to expand to more geographies by April.
In this photo illustration, the Apple logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
Apple, Inc. (AAPL) stock climbed early Tuesday on optimism over an uptick in iPhone demand, fueled by a report that the tech giant has formed a partnership with Alibaba Group Holding Limited (BABA) to roll out Apple Intelligence features in China.
The stock was last seen trading up 3% at $234.59 with the upside accompanied by below-average volume.
The Information reported the Apple-Alibaba tie-up, citing a person with direct knowledge of the decision, according to Reuters. Both companies have submitted the artificial intelligence (AI) features for China’s cyberspace regulator approval.
Apple reportedly considered several options, including Baidu, Inc. (BIDU), Tencent Holdings Limited (TECHY), ByteDance, and AI startup Deepseek, before finally zeroing in on the Jack Ma-founded e-commerce company.
The development comes after an extended iPhone demand softness due to lackluster consumer mood amid macroeconomic uncertainties. The December quarter results showed iPhone revenue trailing expectations and China revenue declining year-over-year amid intensifying competition from homegrown rivals.
Apple rolled out its AI features, which it calls Apple Intelligence, in the U.S. in December. CEO Tim Cook said it would be available in more geographies by April.
In a report released Tuesday, Morgan Stanley analyst Erik Woodring said Apple Intelligence was a slight incremental tailwind in the U.S. for the December quarter.
The analyst noted that U.S. demand for iPhone 15 Pro/iPhone Pro Max, which are from the old lineups but comes with the features, and the iPhone 16 family, was 3.5 points higher than in the rest of the world.
Morgan Stanley’s analysis showed that much of the demand uptick came from U.S. consumers accelerating purchases of the discounted one-year-old iPhone 15 Pro/Pro Max.
“Apple Intelligence upgrade cycle [is] undervalued by market,” the firm said.
Woodring expects iPhone demand in China to improve in the March quarter as government subsidies act as a “rising tide lifts all boats.”
Delving into the fourth-generation iPhone SE launch this week, Woodring said he assumes starting price of $499 versus the current SE3 priced at $429, going by the speculated specifications.
The analyst also said Apple might eliminate the 64GB storage SKU to synthetically raise the iPhone SE price.
He forecasts SE shipments of 3 million for the March quarter and 15 million for the fiscal year 2025.
On Stocktwits, retail sentiment toward Apple stock worsened to ‘bearish’ (42/100) from the ‘neutral’ mood seen a day ago, with message volume staying at ‘low’ levels.
Apple stock has been stuck in a trading range ever since it pulled back from its Dec. 26 all-time high of $260.10. It has lost about 9% this year.
Alibaba stock rose 2.76% to $114.39 in reaction to the rumor.
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