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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?
About Apple Stock
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.
Apple’s Q2 Results Top Estimates
Apple’s fiscal Q2 2025 arrived on May 1 with both flash and friction. Revenue hit $95.4 billion, climbing 5.1% year over year, while net income rose to $24.8 billion. EPS beat expectations by 2.5%, up 8% at $1.65.
While CEO Tim Cook credited the iPhone 16e demand and momentum from Mac and iPad, what really stood out was Apple’s services - Apple TV+, Music, and the App Store – generating $26.6 billion, growing in double digits, and pulling the ecosystem tighter.
Apple closed the quarter with $28.2 billion in cash, dwarfing its $6 billion in short-term liabilities. The company doubled down on shareholder returns, authorizing a massive $100 billion stock buyback and raising its dividend by 4% to $0.26 per share.
Yet behind the gloss, headwinds stirred. A $900 million tariff drag looms over the June quarter, and China’s 2.3% sales dip to $16 billion whispers of regional fatigue.
For the June quarter, management sees low to mid-single-digit revenue growth and gross margins between 45.5% and 46.5%.
Analysts monitoring the company remain optimistic, predicting its EPS to be around $7.11 for fiscal 2025, up 5.3% year over year, before surging by another 7.9% annually to $7.67 in fiscal 2026.
Apple’s AI Silence and the Alibaba Lifeline
Lately, Apple’s innovation engine has felt eerily quiet. Siri’s major upgrade isn’t coming until spring 2026, and its much-hyped Apple Intelligence suite is still MIA in China. As local competitors surge ahead with feature-packed AI devices, Apple risks looking outdated in its second-largest market.
But Alibaba’s move could flip the script. It could finally clear the regulatory fog and let Apple roll out Apple Intelligence in China, where tight data laws demand a domestic partner. However, the alliance is drawing fire back home. U.S. lawmakers worry the deal could unwittingly help China advance its AI agenda using Apple’s ecosystem. Critics argue that it echoes the TikTok saga, raising national security red flags.
Investors might want to tread carefully, despite Apple’s long-standing reputation for navigating storms with precision.
What Do Analysts Expect for Apple Stock?
AAPL stock has a consensus “Moderate Buy” rating overall. Out of 37 analysts covering the tech stock, 18 recommend a “Strong Buy,” three advise a “Moderate Buy,” 13 analysts play it safe with a “Hold” rating, one has a “Moderate Sell” rating, and two have a “Strong Sell” rating.
The average analyst price target for AAPL is $230.75, indicating potential upside of 14%. The Street-high target price of $300 suggests that the stock could rally as much as 50%.
