Why Is Alibaba Stock Trading Lower On Monday?

Alibaba Group Holding BABA stock dropped on Monday after a report claiming the Trump administration flagged concerns over Apple Inc.’s AAPL potential deal with the Chinese e-commerce juggernaut.

The U.S. government has recently been investigating Apple’s plan to tap Alibaba to make the Chinese company’s AI available on iPhones in China, Bloomberg reported on Monday, citing the New York Times.

Alibaba Group stock surged over 45% year-to-date, backed by the artificial intelligence frenzy.

Also Read: Alibaba Misses Revenue, But AI Cloud Has Silver Lining

Bloomberg analyst Catherine Lim highlighted risks to Alibaba’s potential cloud-revenue upside from U.S. resistance toward Apple iPhone’s potential deal.

According to the analyst, this may prompt Alibaba to delay research outlays and capital spending on related infrastructure.

Apple tapped Alibaba to bring AI features to iPhones in China to regain lost market share. It lost market share in the country to government-incentivized local vendors amid intensifying geopolitical tensions with Washington. China also mandated international companies to tap a domestic company as a primary partner, which prompted Apple to forge partnerships with Chinese companies.

Last week, Alibaba reported its fiscal fourth-quarter results. The Jack Ma co-founded company reported quarterly revenue growth of 7% to $32.58 billion, missing the analyst consensus estimate of $33.08 billion.

It clocked an adjusted earnings per ADS of $1.73, which beat the analyst consensus estimate of $1.48. Cloud Intelligence Group revenue grew by 18% to $4.15 billion.

Price Actions: BABA stock is down 0.69% at $122.61 at the last check on Monday. AAPL is down 1.36%.

Read Next:

• Chinese Stocks Rally as U.S. and China Agree to Slash Tariffs in Surprise 90-Day Deal

Image via Shutterstock