Sristi Suman Jayaswal
4 min read
In This Article:
For Apple (AAPL), artificial intelligence is the key to future-proofing its robust devices and services ecosystem. Yet in China, Apple’s second-largest market, the company’s AI ambitions have hit a wall. Between trade tensions, strict regulations, Beijing’s data-localization demands, fierce competition for device sales, Apple’s Intelligence suite remained locked out of the mainland.
Alibaba Group (BABA) has just handed Apple a potential key. Its Qwen3 AI models have been fine-tuned for Apple’s MLX framework, enabling them to run natively on iPhones, iPads, and Macs.
It is a strategic play. Apple needs a domestic AI partner to navigate China’s tight controls, and Alibaba’s open-source route gives it both flexibility and local legitimacy. This could finally pave the road for Apple Intelligence to launch in China - a much-needed boost for iPhone sales.
Nearly six months into 2025, and Apple bulls are still bruised, with shares 23% off their peak. So, will this Alibaba alliance reignite the rally or trigger more turbulence?
Apple (AAPL), the $3 trillion global tech titan from Cupertino, redefined technology with the iPhone, Mac, and iPad. But its real power play now is the services segment. With over a billion paid subscribers and high-margin offerings like iCloud, Apple Music, and the App Store, it is weathering global headwinds while tightening its grip on the digital ecosystem.
Despite being big on innovation, AAPL’s stock has slumped 19.5% in 2025, making Apple the worst YTD performer among the Magnificent Seven. Regulatory headwinds and mounting competition have eroded investor confidence. While large-cap tech rebounded in May, Apple missed the rally and dropped 6% that month alone. The decline deepened with rising tariff tensions, especially fears of a 25% hit if Apple doesn’t shift manufacturing to the U.S.
Yet the core issue extends beyond geopolitics and trade friction. “Apple Intelligence” debuted at WWDC 2024, failed to generate lasting enthusiasm, hindered by limited device compatibility and the postponement of key features like the enhanced Siri. Legal pressures and underwhelming developments at WWDC 2025, where cosmetic updates overshadowed bold innovation, further reinforced perceptions that Apple is trailing AI leaders such as Google (GOOGL). While the company’s ecosystem remains robust, its current AI narrative lacks the momentum to inspire market confidence.
