New hope for Apple share: How Alibaba should help with China turn

• Apple’s China sales under pressure
• New strategic partnership with Alibaba could turn the paper
• Analysts are optimistic

China sales make Apple difficulties

Apple has completed the first business quarter of the 2025 fiscal year with a solid increase in profit. The profit per share increased to $ 2.40-after $ 2.19 in the previous year-and was therefore above the expectations of the analysts, which had expected $ 2.35. Overall, the group achieved a quarterly profit of $ 36.3 billion, which corresponds to an increase of seven percent.

Apple was also able to increase in sales: the revenues in the traditionally strong Christmas quarter rose from $ 119.58 billion to $ 124.3 billion and thus largely corresponded to the forecasts. Analysts had expected sales of $ 124.27 billion in advance. However, the Chinese market was worried: sales fell by eleven percent to $ 18.5 billion – a decline that was under the expectations of analysts.

Apple is increasingly under pressure in China by domestic competitors. CEO Tim Cook was carefully optimistic and referred to possible positive effects through state economic measures.

The icon struggles with the increasing competitive pressure in the Chinese market – especially through Huawei, Xiaomi and Vivo. Huawei has recently successfully recovered market shares with its new smartphone model Mate 60 and established itself as a leading provider in the area of ​​AI-controlled devices. While Chinese consumers preferred Iphones for a long time because of their technological superiority, domestic manufacturers are now significantly absorbing their own innovations.

AI initiative with Alibaba?

Apple is now planning to make its new AI functions available in China under the name “Apple Intelligence” by mid-2025. However, in order to meet the regulatory requirements there, the US group works with the Chinese Tech company Alibaba. Apple has already introduced its AI services in other markets, but in China the start has so far been delayed by strict data protection and cyber security requirements and the lack of a local cloud partner.

Since foreign cloud services in China are subject to restrictions, Apple needs an alternative infrastructure for data storage and processing. Cooperation with Alibaba, which has a powerful and legal cloud platform, now creates the basis for implementation. An examination of possible partnerships was preceded by Baidu and Tencent. Ultimately, however, Apple opted for Alibaba – not least because of its international orientation and technical capacities in the field of artificial intelligence.

Alibaba deal could turn the sheet for Apple

Alibaba also recently presented a new AI model that could possibly also be of strategic benefit for Apple, as Barron’s explained. The model called “Qwen2.5-Omni-7b” is multimodal and can process text, images, audio and video and react to language and text in real time. With seven billion parameters, it is comparatively compact and therefore potentially used on smartphones – even without constant connection to a cloud. This makes it particularly interesting for integration on iPhones in China.

For its part, Apple is currently waiting for the official approval for the partnership with Alibaba to offer its own AI platform “Apple Intelligence” on devices that are sold in mainland china. At the same time, Apple’s AI upgrades for Siri are delayed outside of China, which continues to affect sales growth.

For Alibaba, the new model, in turn, is also a means to assert itself against national AI competitors like Deepseek and keep up with western tech companies. The company is planning to invest around $ 52.4 billion in cloud and AI infrastructure in the next three years.

Analysts express confidence

Also, according to the analysts of the investment bank Wedbus around Daniel Ives, Apple may have overcome the crucial hurdle for the implementation of his AI plans in China with the planned cooperation with Alibaba. So far, the Chinese market has been considered the lack of puzzle piece in Apple’s global AI strategy – now a solution seems to be found.

“Apple is stuck with its AI strategy for China until a technology partner officially gets green light from Beijing,” explains Ives according to Investing.com. Now Alibaba has established itself as a preferred partner to introduce Apple Intelligence in the most important Asian market for Apple. According to Wedbus, this step comes for the group at the right time: Around 100 million of the 200 million iPhones in China are considered ready for an upgrade. After the recent noticeable market share loss on Huawei, Apple could now make up the ground again with the new AI functions in the iPhone 16 and the iPhone 17 expected for September.

In the partnership with Alibaba, the analysts see the beginning of a comprehensive AI offensive. “Apple is only at the beginning, but in the long term, around 25 percent of the world’s population will use AI via an Apple device,” predicts the Wedbush team. Cooperation with Alibaba is no coincidence, because the Chinese group counts with the leading providers in the field of AI and Cloud – and Apple’s step fell in terms of time with new government -political impulses in Beijing.

Despite the late entry into the AI ​​market, Apple is also strategically positioned according to Wedbus: As the operator of a closed ecosystem, the company can in future also earn at any important AI application that runs through its platform-similar to the Chinese provider Deepseek.

Accordingly, Wedbus is confident that Apple will record growth again in the Juni quarter in China. In view of a global user base of 1.5 billion active iPhones and around 2.4 billion iOS-Devices expect positive impulses for the entire financial year 2026. Geopolitical risks like the US tariffs also sees Daniel Ives calmly: “Cook is ten percent politician and 90 percent CEO,” said his final comment.

Editor finance.net

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