Here’s why the Alibaba stock price crashed in Hong Kong

Alibaba stock price crashed by over 3% on Monday morning in Hong Kong as concerns about its artificial intelligence remained. BABA share price dropped to H$118.8, a few points below last week’s high of H$131.9. It is nearing a technical bear market after falling by almost 20% from its highest point this year.

Trump administration is concerned about the Apple AI deal

The main catalyst for the Alibaba share price drop in Hong Kong was a report by the Trump administration scrutinizing its deal with Apple, the second-biggest company globally after Microsoft.

Apple, which has lagged behind other technology companies in the artificial intelligence race, announced that it would use Alibaba’s AI models for phones made in China. 

Now, there are signs that the White House and other congressional leaders have expressed concerns about the deal. These leaders may want the company to extend its partnership with OpenAI’s ChatGPT.

Such a move would likely be because Sam Altman, OpenAI’s founder, has been relatively close to the Trump administration. He donated $1 million to his inauguration fund and recently took part in his trip to the Middle East. 

BABA stock price also fell after its earnings

Alibaba stock price also dropped after the company published relatively weak financial results last week. 

The data showed that its revenue rose by just 7% to 236.5 billion yuan or $32.8 billion, missing the estimated 237.9 billion yuan.

These numbers reflected the difficult situation in China and its international business. China’s economy remains under pressure, with a report released on Monday showing thar retail sales rose by 5.1%, missing the estimated 6.0%.

Alibaba’s numbers were also affected by the trade war since it does a lot of business in the United States. Recent data showed that imports from China to the US have remained under pressure in the past few months. They only increased in March as companies rushed to buy products ahead of tariffs.

Alibaba’s Taobao and Tmall Group’s revenue rose by 12% to $9.79 billion, while the Alibaba International Digital Commerce revenue jumped by 22% to $4.67 billion. The closely-watched cloud intelligence division rose by 18% to $4.15 billion. 

The cloud business growth accelerated because of its artificial intelligence solutions that are doing well. Just last week, the company released a more advanced AI model focused on the video industry. 

Cainiao Smart Logistics’s revenues dropped by 12%, while its local services and digital media revenues rose by double digits.

Analysts are still optimistic about Alibaba stock price, citing the end of the acrimony regulatory and its cheap valuation. The average estimate is that its revenue will grow by 7.5% this year to 1.07 trillion yuan, followed by 1.15 trillion yuan next year.

Alibaba trades at a cheap valuation of about 12x 2025 sales, much lower than other companies. For example, Amazon trades at a multiple of 31.85, while Tencent has a multiple of 17.45.

Alibaba stock HK price technical analysis

Our pre-earnings Alibaba stock price forecast was wrong as it did not rise. Instead, it crashed from this month’s high of H$131.9 after its earnings missed estimates and concerns about its AI deal with Apple rose.

The stock remains above the 100-day moving average and has just retested the highest swing on October 2 last year.  

Looking ahead, the BABA share price will likely remain under prssure in the next few weeks. If this happens, the stock may drop to H$110 and then resume the upward trend as the AI and earnings jitter ease.