Alibaba Shares Plunge 10% Before Rebounding to Close Higher
Uncertainty surrounding Chinese companies due to Trump’s new measures briefly rattled tech giant Alibaba, which saw its shares tumble despite announcing a major AI investment.
Alibaba’s stock recovered on Tuesday in Wall Street after initially plunging over 10% earlier in the day, following a new directive from Donald Trump that reignited concerns over the ongoing U.S.-China tech war.
Chinese stocks in Hong Kong dropped 3.7%, while Alibaba’s shares in New York fell as much as 10.3% before rebounding to close up 3.9% on the day. Monday’s session had marked its steepest decline since October 2022.
Trump and Deepseek
Trump’s weekend order to the U.S. Committee on Foreign Investment, aimed at restricting Chinese investments in technology and other strategic sectors, fueled further uncertainty. Additionally, the U.S. government’s plans to audit foreign-listed companies and scrutinize their ownership structures deepened the selloff in Chinese stocks.
These declines now threaten to undo the global rally that Chinese tech stocks had been experiencing this year, driven by optimism around initiatives like DeepSeek. While investors initially downplayed Trump’s early tariff measures on China, they are now reassessing geopolitical risks.
The market reaction resembled a “sell first, ask questions later” scenario. Some analysts see Trump’s memorandum as a wish list of policies he aims to implement—primarily as leverage in negotiations with China.
Alibaba’s Commitment to AI
Despite market turbulence, Alibaba reaffirmed its commitment to artificial intelligence, announcing plans to invest over ¥380 billion ($53 billion) in AI infrastructure over the next three years. This initiative positions Alibaba as one of China’s largest AI investors.
The ongoing geopolitical tensions seem to be fueling a contest between Trump and Beijing over who holds greater influence over Chinese equity performance. Despite Monday’s drop, Alibaba’s stock has surged more than 50% year-to-date, while the Nasdaq Golden Dragon China Index has gained nearly 12%.
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