Alibaba’s stock price extended its recent sell-off as Chinese tech shares tumbled, wiping out $2.4 trillion in market value amid growing doubts about the AI industry. BABA shares fell to $100 in premarket trading, down 48% from their highest point this year.
The decline may continue as bears target the key support level at $91.96, the stock’s lowest point in June.
Alibaba stock plunges as China stock market sell-off continues
BABA has continued its strong sell-off as investors continued dumping Chinese shares. The Hang Seng Tech Index dropped to 3,793 units, its lowest level since September 2024 and 44% from its highest point in September last year.
Other top Chinese technology companies were in the red. Lenovo Group dropped by 10%, while Hua Hong Grace Semiconductor fell by 9.46%. Other top companies like Z.AI, Netease, MiniMax, and Semiconductor Manufacturing International were in the red.
Alibaba stock has dropped because of the ongoing competition in the artificial intelligence in China. While Alibaba has a good market share, other top companies like MiniMax, MoonShot, DeepSeek, and Z.ai are gaining share. DeepSeek has just raised $15 billion from investors, making it one of the most funded companies in the country.
These Chinese AI companies are also seeing strong competition internationally from other well-funded firms like Microsoft, OpenAI, SpaceX, and Meta Platforms.
All this is happening as Alibaba continues spending huge sums of money in the AI space. It recently raised $10 billion by selling its Hong Kong shares to fund its AI ambitions. As a result of the spending, the company’s free cash flow and profits have tumbled in the past few quarters.
Alibaba’s revenue is growing, but concerns remain
The most recent results showed that Alibaba’s business was doing relatively well, helped by its cloud business. Its revenue rose by 9% to $39.6 billion, with its AI cloud and compute business making $7.13 billion, up by 45% from the same period last year. The division’s growth was fueled by the rising AI demand in China and other countries.
Alibaba’s core e-commerce business is slowing, with its revenue being flat from the same period last year. Compounding the issue is the ongoing push for its quick or instant commerce that allows customers to receive products in under an hour. This business has become highly competitive, which is affecting its margins.
Alibaba share price technical analysis
BABA stock chart | Source: TradingView
The weekly chart shows that the BABA stock has been in a strong sell-off this year. It has dropped from a high of $193 in September to the current $100.
The stock has formed a descending channel and is about to form a death cross pattern as the spread between the 50-week and 200-week moving averages nears a crossover.
Alibaba stock has moved below the 61.8% Fibonacci Retracement level of $109. Therefore, the path of the least resistance for the stock is bearish, with the next key target to watch being $91.96, its lowest level in June this year. A drop below that level will point to more downside.
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