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Alibaba Group Holding Ltd. (NYSE: BABA) stock fell nearly 5% in Thursday's premarket trading, and the culprit isn't anything Alibaba did this week. It's the chips it wants to buy.
Investors are weighing tighter U.S. scrutiny of advanced NVIDIA Corp. (NVDA) chips against growing uncertainty ahead of next week's earnings. The decline followed a broader sell-off in Chinese artificial intelligence stocks, while Nasdaq futures fell 0.65% and S&P 500 futures declined 0.35%.
Alibaba's Hong Kong-listed shares dropped as much as 7.3% Thursday amid concerns that stricter U.S. enforcement could disrupt Chinese cloud providers' access to advanced AI chips, Bloomberg reported.
UOB Kay Hian analyst Julia Pan told Bloomberg that Chinese cloud companies have stockpiled chips since early 2026. That's a nice buffer, but a buffer only lasts so long. Prolonged restrictions could delay AI research and development.
The worries center on scrutiny of NVIDIA's chip distribution network and allegations involving Singapore-based Megaspeed International, through which Alibaba reportedly rents NVIDIA hardware. Renting, it turns out, is a lot easier to regulate than buying.
Despite these challenges, Alibaba continues to strengthen its domestic semiconductor capabilities.
The company is preparing a Hong Kong listing for its chip subsidiary, T-Head, although regulatory approvals remain pending. It also introduced its Zhenwu V900 AI chip in September, with production expected to begin in early 2027.
Separately, TechNode reported Wednesday that Alibaba opened a preview of Qwen4-Max. The AI model supports image and video inputs and can process up to 1 million tokens. So the company is hedging the hardware question with a software answer.
Alibaba will report quarterly earnings Nov. 19. Analysts expect earnings of $1.39 per share on revenue of $40.35 billion.
The stock remains below its 20-day, 50-day and 200-day moving averages, signaling continued technical weakness. Its relative strength could face another test near $92, while resistance stands around $112.50.
Meanwhile, MarketDash Edge Rankings show strong value and growth scores of 93.55 and 74.22, respectively. However, weak momentum and quality scores highlight ongoing risks. Cheap and growing, in other words, but not exactly beloved right now.
BABA Stock Price Activity: Alibaba shares were down 4.52% at $96.93 during premarket trading on Thursday, according to market data.
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