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Alibaba (NYSE: BABA) stock is trading higher in early US price action today after Chinese President Xi Jinping met the country’s entrepreneurs including Alibaba’s co-founder Jack Ma at a symposium yesterday.
Alibaba shares have anyways gained over 60% from their 2025 lows and look set to stretch the rally even further in today’s price action.
Jinping Meets Chinese Entrepreneurs
According to Xinhua, Xi told Chinese entrepreneurs “It is necessary to resolutely remove all kinds of obstacles to the equal use of production factors and fair participation in market competition.” He added the country should “continue to promote the fair opening of the competitive field of infrastructure to all kinds of business entities, and continue to make great efforts to solve the problem of difficult and expensive financing for private enterprises.”
Xi, who cracked down on Chinese tech companies in 2021 stressed, “Now is the perfect time for private enterprises and entrepreneurs to thrive.” He called upon Chinese companies and entrepreneurs to “show their talent” while adding, “The new era and new journey have broad prospects for the development of the private economy and great potential.”
China’s Growth Has Sagged
Notably, China has been trying to revive its sagging economy that barely met the 2024 GDP growth target of 5% after the flurry of monetary and fiscal stimulus measures that were unleashed in the back half of the year.
Analysts see Xi meeting tech leaders from companies including Alibaba, Huawei, and DeepSeek as a positive. “This is the strongest signal China could release to boost social confidence. The fact that Xi Jinping himself shows up to meet with the entrepreneurs highlights the political significance of this meeting,” said You Chuanman, senior lecturer at the School of Law, Singapore University of Social Sciences.
Angela Huyue Zhang, a law professor at the University of Southern California who wrote a book about China’s regulation of tech firms also echoed similar views and told CNN, “With the domestic economy slowing and geopolitical pressures escalating, the government is making it clear that it values and relies on the private sector to drive innovation and stimulate growth.”
Alibaba Still Trades Well Below Its 2020 Highs
While US tech stocks have rallied and delivered double-digit returns in the previous two years, Chinese tech stocks, especially Alibaba have sagged after peaking in 2020. That year, China cracked down on the company and Alibaba had to cancel the IPO of its subsidiary Ant Financial. The tech crackdown only worsened in 2021 and although Alibaba paid a record $2.8 billion fine to settle the antitrust case, markets were not too convinced that the worst is over for the company.
Ma wasn’t seen in public for several weeks after the cancelation of Ant IPO in November 2020 and appeared in an online interaction only in January 2021. Ma’s participation in the event with Jinping became all the more notable as the Chinese billionaire was the face of China’s crackdown on its tech moguls whom the Communist Party believed had become too big for their shoes.
As Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong aptly said, “Having Jack Ma in particular would provide a symbolic end to the tech-sector crackdown, which essentially started with him back in 2020.” He added, “In practice, the crackdown has been over for a while now. But the optics of Xi telling Ma and other tech leaders to go forth and prosper would send a crystal-clear message that the government’s stance has been completely reversed.”
Renewed Interest Towards Chinese Stocks
There has been a renewed interest in Chinese stocks ever since DeepSeek announced that its artificial intelligence (AI) model which it built for just about $6 million performed better than Western rivals like OpenAI on several parameters. Last week, Chinese electric vehicle giant BYD soared to a record high after it released an assisted driving system in partnership with DeepSeek.
The driving system which is named “DiPilot” would be offered free along with BYD cars. This would make BYD the only automaker offering assisted self-driving in cars priced below $10,000.
What has aided the rally in Chinese shares like Alibaba has been their underperformance over the last five years which made their valuations quite attractive.
Jefferies Raised Its Target Price for Alibaba
As Sandy Pei, a senior portfolio manager for China equities at Federated Hermes said, “Chinese equities have been trading at extremely depressed valuations with most risks well discussed and reflected in the prices.” He added, “The DeepSeek event has acted as a catalyst, boosting sentiment around Chinese equities. Despite recent performance, the market remains attractively valued.”
Meanwhile, Jefferies raised its target prices on several Chinese stocks including Alibaba as it sees the asset class as undervalued.
Alibaba Apple Partnership
Notably, Apple has partnered with Alibaba and will integrate its AI into iPhones in China. The company hasn’t been offering its “Apple Intelligence” features in China due to regulatory issues. The unavailability of these AI-powered features was among the reasons Apple’s sales in China fell sharply in December quarter and it lost its position as the largest smartphone company in the country.
Meanwhile, growing US-China tensions are also working to the detriment of US brands. China is increasingly becoming a tough market for foreign brands like Apple, General Motors, and Starbucks and they have been losing market share to domestic Chinese companies.
Notably, apart from being the second biggest market for Apple, China is also the key sourcing destination for the iPhone maker. However, it has been looking to increase sourcing from other Asian countries, and Foxconn, which makes most iPhones globally is expanding its footprint in India.
With the Alibaba partnership, Apple might be able to provide its AI features in China which would help buoy its sales. During the fiscal Q1 2025 earnings call last month, Apple CEO Tim Cook said that iPhone 16 sales fared better in regions where the company offered Apple Intelligence features.
